A. In November 1982, the city council adopted Ordinance No. 305, a "mobilehome rent stabilization ordinance ...*providing a formula for maximum annual rent increases and providing a procedure for hardship exceptions," the provisions of which were set forth in former Sections 5.20.010 through 5.20.060 of this code. In November 1982, all of the mobilehome parks in the city were owned by private parties who operated their parks as a for-profit business and who did not reside in the parks.
B. The findings and declaration of purpose set forth in Ordinance No. 305 referred to the following conditions: the shortage of mobilehome spaces in the city and surrounding areas and the corresponding low vacancy rate in mobilehome parks, the high cost and impracticality of individual homeowners moving their mobilehomes from one park to another, the substantial investment of mobilehome owners in their homes, and the large numbers of residents in the mobilehome parks who were senior citizens and others on fixed incomes for whom there was a lack of suitable alternative housing. In view of these factors, the city council found and declared in Ordinance No. 305 that it was "necessary to take action to protect the owners and occupiers of mobilehomes from unreasonable rent increases, while at the same time recognizing the need of mobilehome park owners to make a suitable profit on the operation of mobilehome parks in Pismo Beach, with rental increases sufficient to cover increased operating costs such as repairs, maintenance, insurance, utilities, general upkeep*...*and to receive a fair return on the owner's property."
C. In the middle 1980s, the ownership of each of the mobilehome parks in the city changed hands. At the time, Ordinance No. 305 had been in effect for several years and regulated the rents in all or substantially all of the mobilehome spaces in the parks.
D. One of the parks was purchased by a corporation whose shareholders were/are mobilehome owners in and residents of that park (the "resident-owned park"). While a majority of the spaces in the resident-owned park are occupied by shareholders of the corporation which owns the park and such resident owners do not pay rent, a significant number of spaces in the resident-owned park remain as rental spaces. The rental spaces in the resident-owned park were and remain subject to mobilehome rent stabilization.
E. Increasingly, the owners of mobilehome parks in the city, including the resident-owned park, sought rent increases in excess of the automatic "seventy-five percent of CPI" increase allowed by the formula in Ordinance No. 305, pursuant to the "hardship exception" in Ordinance No. 305. The basis for a hardship exception rent increase under Ordinance No. 305 was a showing that the park owner was "unable to make a reasonable profit and return on the property involved."
F. In support of the requested hardship exception rent increases, the park owners have asserted various different rationales and arguments. Such requested hardship exception rent increases were vigorously opposed by park tenants, and the rent hearings before the city council were very controversial and adversarial.
G. Following hearings on requested hardship exception rent increases in fall 1991, and pursuant to Section 5.20.050 of this code, a subcommittee of the city council was formed and studied the substance and procedures of the Ordinance No. 305 in detail, conducted a number of meetings with the park owners and their representatives and with the representatives of mobilehome owners, presented several reports with supporting materials to the city council and made a variety of recommendations to the city council. The city council conducted three public hearings in review of the subcommittee's reports and recommendations, and received extensive public comment.
H. The city council finds and declares:
1. The original conditions which prompted adoption of Ordinance No. 305 (set forth in subsection B of this section) have not disappeared and there is a continuing need to regulate mobilehome park rents in response to each of such conditions. While the regulation of mobilehome
park rents is necessary to protect mobilehome owners from unreasonable rent increases, park owners need to receive rent increases which are sufficient to cover increased operating costs and the costs of capital repairs and to provide a fair profit and return on the owner's property.
2. It is in the public interest to retain the concept of limiting the automatic annual rent increase to a seventy-five percent of CPI increase, but to define more specifically how increases in base rent in excess of seventy-five percent of the CPI should be calculated and how capital expenses of the park should be treated in relation to such rent calculations.
3. The prior conduct of the park owners provides a ready basis for determining what is a fair profit and return for each of the mobilehome parks in the city. The park owners presumably knew the income and expenses of their parks at the time they purchased them and believed that the rent-controlled income of the park at that time less its operating expenses at that time would yield a fair operating profit and return. If the mobilehome park's operating income is maintained at approximately the level of operating income at the time the park owners purchased their parks in the mid-1980s, with adjustments for inflation, then the park owners will be receiving a fair profit and return. Therefore, increases in base rent in excess of seventy-five percent of CPI should be permitted if such increases are necessary to maintain the mobilehome park's net operating income adjusted for inflation and thereby provide a fair profit and return to the park owner.
4. The basic concept of defining a minimum fair profit and return by maintaining net operating income of a mobilehome park has been reviewed and upheld in the courts and adopted into rent stabilization ordinances in other jurisdictions. However, the concept was not proposed by park owners in their recent hardship exception rent increase applications.
5. As a practical matter, it is necessary to define and implement the maintenance of net operating income concept on per space basis in the mobilehome parks in the city because the resident-owned park includes both rental and nonrental spaces and the number of rental spaces in such park has been decreasing over the years (as purchasers of mobilehomes in former rental spaces have also purchased shares in the resident-owned corporation).
6. As parks age, large capital expenses become increasingly necessary and inevitable. Expressly providing for rent increases to reimburse park owners for capital expenses is intended to assure that, over the long run, the condition of the park is maintained and kept up for the benefit of its residents. There are two purposes in calculating rent increases for capital expenses separately from maintenance of net operating income increases in base rent:
a. To assure homeowners that rent increases for capital expenses (one-time expenditures which are subject to wide fluctuation from year to year) will be charged to homeowners only for so long as necessary to reimburse such expenses, that capital expenses will not result in permanent increases in base rent, and that capital expense rent increases are not subject to being "compounded" by automatic annual seventy-five percent of CPI increases; and
b. To assure park owners that capital expenses will be reimbursed fully and do not reduce net operating income of the park below the amount necessary to provide a fair return.
7. It is in the public interest to alter the procedures governing rent increases in excess of seventy-five percent of CPI increases, which now provide for a hearing before the city council at city expense on every proposed rent increase in excess of seventy-five percent of the CPI. Such modified procedures should include (a) provisions for recovery of the city's cost of rent hearings, which in ordinary circumstances should be paid in equal shares by the tenants as a group and by the park owner, (b) better-defined requirements for financial reporting and information from park owners, (c) procedures requiring that park owners and tenant representatives meet and confer regarding rent increases in excess of seventy-five percent of the CPI, including the disclosure of the financial information used to calculate the rent increase, with incentives to negotiate an agreed rent increase and avoid the expense and divisiveness of an adversarial rent hearing, (d) procedures requiring that a petition for a rent hearing be signed by a homeowner majority before a rent hearing is held, and (e) procedures for selection of an independent hearing officer to conduct and decide rent hearings without the matter coming before the city council. (Ord. 92-17 § 1, 1992: prior code § 9.60.010)
As used in this chapter:
"Base rent" means the amount of monthly rent which is subject to annual CPI rent increases and operating costs increases. "Base rent" does not include rent increases for capital expenses or capital improvements.
"Capital expense" means a repair or replacement of existing facilities or improvements which has an expected life of more than one year, in excess of five thousand dollars. Examples of a capital expense are resurfacing of existing park roadways, replacement of the roof of an existing clubhouse, and replacement of existing utility transmission lines and/or underground pipe systems within the park. (An expenditure which would otherwise be characterized as a capital expense but which is less than five thousand dollars per year shall be treated as a maintenance expense, rather than as a capital expense.)
"Homeowner" means the owner of a mobilehome and tenant of a mobilehome space in a mobilehome park, responsible for paying rent to management.
"Homeowner majority" means the number equal to at least fifty percent of the number of mobilehome spaces in the park which are entitled to cast a vote at the time of voting, plus one space. On voting matters such as petitioning for rent arbitration or approving a capital improvement, each space in a mobilehome park shall be entitled to cast one vote; if there is more than one homeowner for a space, then any of the homeowners may cast the vote for the space. If a homeowner requests that management not provide to homeowner representatives such homeowner's name or mailing address, then such space shall be excluded from the number of spaces in the park for purposes of calculating a homeowner majority.
"Management" means the owner of a mobilehome park or agent or representative authorized to act on behalf of the owner in connection with matters relating to a tenancy in the park.
"Meet and confer session" means an informal meeting between authorized representatives of management and homeowners of the same park for the purpose of discussing a proposed increase in rent and the basis for it.
"Mobilehome," for purposes of this chapter, means and includes a structure designed for human habitation and for being moved on the street or highway.
"Mobilehome park" means an area of land where two or more sites used to accommodate mobilehomes are rented, or held out for rent, for greater than thirty consecutive days.
"New construction" means any newly constructed spaces initially held out for rent after January 1, 1990.
"Once a year" means once every twelve months.
"Park" means the mobilehome park.
"Rent" means any consideration demanded or received in connection with the use or occupancy of any mobilehome space, but exclusive of any amounts paid for the use of the mobilehome dwelling unit itself. Rent includes base rent, capital expense charges (if any) and capital improvement charges (if any). "Rent" does not include charges for the use of coin-operated washers and dryers in park laundry facilities, or charges for storage facilities off the mobilehome site.
"Rules" refers to the rules for mobilehome park rent hearings, adopted by resolution of the city council. (Ord. 03-02 § 1, 2003; Ord. 02-04 §§ 1, 2, 2002; Ord. 92-17 § 1, 1992)
A. The rent control provisions of this chapter shall apply to any mobilehome park where two or more mobilehome sites are rented or held out for rent, subject to the following exemptions set forth in subsection C below.
B. For purposes of enforcement of the rent control provisions under this chapter, the application of this chapter to mobilehome parks, as defined herein, but not meeting the definition of mobilehome park under the Mobilehome Residency Law (Civil Code § 798.4), is intended to be and is prospective from November 1, 2002.
C. Exemptions.
1. Lease in Excess of Twelve Months.
a. i. Rental agreements meeting the criteria of subdivision b shall be exempt from the rent control provisions of this chapter. The terms of a rental agreement meeting the criteria of subdivision b shall be exempted from coverage under this chapter restricting rents in mobilehome parks, only during the term of the rental agreement or one or more uninterrupted, continuous extensions thereof. If the rental agreement is not extended and no new rental agreement in excess of twelve months' duration is entered into, then the last rental rate charged for the space under the previous rental agreement shall be the base rent for purposes of rent control calculations.
ii. In the first sentence of the first paragraph of a rental agreement entered into on or after January 1, 1993, pursuant to this section, there shall be set forth a provision in at least twelve-point boldface type if the rental agreement is printed, or in capital letters if the rental agreement is typed, giving notice to the occupant that the rental agreement will be exempt from local rent control provisions.
b. Rental agreements subject to this section shall meet all of the following criteria:
i. The rental agreement shall be in excess of twelve months' duration.
ii. The rental agreement shall be entered into between the management and an occupant for the personal and actual residence of the occupant.
iii. The occupant shall have at least thirty days from the date the rental agreement is first offered to the occupant to accept or reject the rental agreement.
iv. The occupant who executes a rental agreement offered pursuant to this section may void the rental agreement by notifying management in writing within seventy-two hours of the occupant's execution of the rental agreement.
c. If, pursuant to paragraph iii or iv of subdivision b, the occupant rejects the offered rental agreement or rescinds a signed rental agreement, the occupant shall be entitled to instead accept a rental agreement for a term of twelve months or less from the date the offered rental agreement was to have begun. In the event the occupant elects to have a rental agreement for a term of twelve months or less, including a month-to-month rental agreement, the rental agreement shall contain the same rental charges, terms and conditions as the rental agreement offered pursuant to subdivision b, during the first twelve months, except for options, if any, contained in the offered rental agreement to extend or renew the rental agreement.
d. Nothing in subdivision c shall be construed to prohibit the management from offering gifts of value, other than rental rate reductions, to occupants who execute a rental agreement pursuant to this section.
e. With respect to any space in a mobilehome park that is exempt under subdivision a from the rent control provisions of this chapter a mobilehome park shall not be assessed any fee or other exaction for a park space that is exempt under subdivision a for the purpose of defraying the cost of administration thereof.
f. At the time the rental agreement is first offered to the occupant, the management shall provide written notice to the occupant of the occupant's right (1) to have at least thirty days to inspect the rental agreement, and (2) to void the rental agreement by notifying management in writing within seventy-two hours of the acceptance of a rental agreement. The failure of the management to provide the written notice shall make the rental agreement voidable at the occupant's option upon the occupant's discovery of the failure. The receipt of any written notice provided pursuant to this subdivision shall be acknowledged in writing by the occupant.
g. No rental agreement subject to subdivision a that is first entered into on or after January 1, 1993, shall have a provision which authorizes automatic extension or renewal of, or automatically extends or renews, the rental agreement for a period beyond the initial stated term at the sole option of either the management or the occupant.
h. This section does not apply to or supersede other provisions of this chapter or state law.
2. Space Not Used as Principal Residence.
a. Notwithstanding any other section in this chapter, if a mobilehome space within a mobilehome park is not the principal residence of the occupant and the occupant has not rented the mobilehome to another party, it shall be exempt from the rent control provisions of this chapter.
b. Nothing in this section is intended to require any occupant to disclose information concerning his or her personal finances. Nothing in this section shall be construed to authorize management to gain access to any records which would otherwise be confidential or privileged.
c. For purposes of this section, a mobilehome shall be deemed to be the principal residence of the occupant, unless the requirements of Civil Code Section 798.21(c) are satisfied.
d. Before modifying the rent or other terms of tenancy as a result of a review of state or county records, as described in subdivision c, the management shall notify the occupant, in writing, of the proposed changes and provide the occupant with a copy of the documents upon which management relied.
e. The occupant shall have ninety days from the date the notice described in subdivision d is mailed to review and respond to the notice. Management shall not modify the rent or other terms of tenancy prior to the expiration of the ninety-day period or prior to responding, in writing, to information provided by the occupant. Management shall not modify the rent or other terms of tenancy if the occupant provides documentation reasonably establishing that the information provided by management is incorrect or that the occupant is not the same person identified in the documents. However, nothing in this subdivision shall be construed to authorize the occupant to change the owner's exemption status of the other property or mobilehome owned by the occupant.
f. This section shall not apply under any of the following conditions:
i. The owner or occupant is unable to rent or lease the mobilehome because the owner or management of the mobilehome park in which the mobilehome is located does not permit, or the rental agreement limits or prohibits, the assignment of the mobilehome or the subletting of the park space.
ii. The mobilehome is being actively held available for sale by the occupant, or pursuant to a listing agreement with a real estate broker licensed pursuant to Chapter 3 (commencing with Section 10130) of Part 1 of Division 4 of the Business and Professions Code, or a mobilehome dealer, as defined in Section 18002.6 of the Health and Safety Code.
iii. The legal owner has taken possession or ownership, or both, of the mobilehome from a registered owner through either a surrender of ownership interest by the registered owner or a foreclosure proceeding.
3. New Construction. Notwithstanding any other section of this chapter, "new construction" as defined herein, shall be exempt from the rent control provisions of this chapter. (Ord. 03-02 § 2, 2003: Ord. 99-03 § 1, 1999: prior code § 9.60.020)
Loading...