West Covina : Owners Drop Rent-Control Test

The owners of a West Covina mobile home park have decided to drop their legal challenge to a controversial city rent-control ordinance after both sides made concessions as to how the law would apply to tenants.

“It was a fair settlement that allowed us to maintain the ordinance,” Steven Wylie, assistant to the city manager, said. The agreement, which was hammered out last month in an out-of-court settlement, must get final City Council approval next week.

Tenants of Friendly Village Mobile Home Park had complained in recent years about what they claimed were exorbitant rent increases averaging 12% a year. The City Council enacted a rent control measure last year that would have rolled rents back to the levels of December, 1983. But the park’s owners filed a civil lawsuit against the city arguing that because 121, or 80%, of the park’s tenants had signed leases specifying annual rent increases of 12% that the “sanctity” of private contracts had been violated. The owners won a preliminary injunction in Los Angeles Superior Court, which halted enforcement of the ordinance.

Under the terms of the settlement, tenants who signed leases are not covered by the ordinance’s rent increase stipulations, said Wylie. However, the remaining 34 tenants who are renting on a monthly basis are covered by the ordinance, he said. When the long-term leases expire, he said, rates will be based on a formula using the consumer price index. He said 85 of the leases expire at the end of December and the remainder expire in 1988.

In the meantime, the park’s owners can continue to pass on costs, through increased rents, for such items as capital improvements, increases in insurance costs and increases in state and local taxes, Wylie said. To slow down the rate of rental increase, he said the park’s owners have agreed to increase rents 3.5% for tenants with leases expiring next year. Tenants with leases that expire in 1988 will have their rent increased by 7% next year.