Last Wednesday’s City Council meeting had an interesting “short-form” rent increase application. In 1988, Escondido Voters approved Prop. K, the rent protection initiative. The initiative was challenged by mobile home park owners in court—all the way to the Supreme Court of the United States. The park owners lost, and Prop. K is still in force today. There is a comprehensive history of Prop. K on the City’s website, go to http://www.escondido.org/mobilehome-rent-control-administration.aspx and click on “Rent Control History”.
This rent increase application was for the Sundance Mobilehome Park, and asked for an increase equal to 75% of the increase in the Consumer Price Index (CPI) between December 31, 2012 and June 30, 2014. The average amount of increase in rent was $15.29. Doesn’t sound too bad. However, two years ago, the previous owner of the Sundance Park had gone through what is called the “long-form” rent revue for an average rent increase of $124.34. That increase was approved by the City Council (made up of the same people that are there today) by a vote of four to one. Councilwoman Olga Diaz voted no, Councilmen Mike Morasco, John Masson, Ed Gallo, and Mayor Sam Abed voted yes. Adding insult to injury to the mobilehome owners, the Council added a $17.07 fee to cover the park owner’s legal fees. The mobilehome owners in the park sued the park owner. The case will be decided in May.
In the meantime, the ownership of the park changed. The new park owner’s property management team has been doing a good job in taking care of the park, and the representative of the mobilehome owners, Don Greene, noted that the residents were pleased with the new management, and were not opposed to this rent increase. Greene pointed out that the previous park owner had been paid for all the legal expense debt (that the $17.07 fees would eventually have covered) at the time of sale. Green argued that continuing to charge the fee after the sale was an illegal rent increase, because there was no longer a debt. He avowed that the new park owner owed the mobilehome owners all the monthly $17.07 fees that had been paid since the sale.
One of the mobilehome owners, Rob Wise, addressed the Council. He assured them that the Superior Court would decide in favor of the mobilehome owners, and claimed that the Rent Review Board (AKA City Council) had ignored the provisions of Prop. K. He went on to draw an analogy between Prop. K and California’s property tax limiting Proposition 13. He noted that male majority on the Council would never argue that it was unfair for the property tax paid by someone who had paid for their home, years ago, to be much less than the property tax paid by someone who had purchased similar home on the same street recently, at a much higher price. But, he continued, the same majority did claim that it was unfair for a park owner to receive much less in space rent for a rent-controlled mobile home, than for a mobilehome recently purchased.
There is no vacancy control protection for mobilehome owners in Escondido as there is in Oceanside, so when a mobilehome is sold the park owner can raise the rent to whatever sum he chooses as fair market value. This, of course, reduces the price a mobilehome owner can receive for his mobilehome, and the owner usually ends up selling to the park owner; who then rents the mobilehome at a much higher rent than could be received for a rent-controlled space.
Morasco began the Council discussion with a question for City Attorney Jeff Epp. Was Greene right about the legal fee being paid off? Epp said he didn’t have any information on that, so the park owner’s representative spoke again—saying that the debt for the legal fees was transferred with the sale. Epp added that the Council should behave as though their 1913 action in approving the rent increase and fee was correct unless and until overturned by the court. Surprisingly, Morasco said he felt it made sense that the mobilehome owners shouldn’t have to pay off the debt, if, indeed, the debt had been settled.
Diaz said she understood that the Council had to proceed as though the 2013 decision was correct, but, she asked Epp, what does Prop. K say about debt transfer? Nothing, replied Epp. Epp went on to note that the Council usually did not address such issues during a short-form application review. Diaz asked if the Council had any responsibility to the Park residents to look into this debt issue? No, replied Epp. Diaz then asked if the residents won their court case, and their rent readjusted to a lower amount, would the rent increase now being requested also be readjusted to a lower amount. Yes, that would be the case, the staff informed her. Seeing a questioning look from Greene, Diaz asked that he be allowed to speak again. At first Abed said no, because the public comment period was over. Diaz reminded Abed that Greene could come back to another meeting to ask his question. Abed, perhaps remembering that the owner’s representative had been allowed to speak again, allowed Greene to speak. Greene noted that perhaps Epp had forgotten that Prop. K did not preclude the Council from considering the $17.07 fees, and that the Council had an obligation to do so. Greene then repeated his argument that the fee was an illegal rent increase. Epp disagreed that the fee was an illegal rent increase, and noted that to make any decision the Council would need all the information regarding the sale of the park. Diaz concluded that she would support the rent increase, but anticipated revisiting the issue after the court had decided on the case.
Abed, of course, disagreed with Greene and agreed with Epp. He then went on to state that with the short-form, issues other than 75% of the CPI were not relevant. No doubt intended for Greene’s ears, Abed went on to state that “you can’t have it both ways” either the long form where all issues allowed under Prop. K can be considered or the short form.
It was interesting to note that under agenda item 8 “PROPOSED CHANGES TO ANNUAL INVENTORY OF CITY FEES” the Councilmen were very concerned about any increases to fees for the building industry. I guess they can have it both ways, no concern for fees to mobilehome owners, great concern for fees that might affect their cronies.