3 Cities Join Challenge to Mobile-Home Rent Ruling

Los Angeles, Simi Valley and Westlake Village have joined other cities around the state asking a federal appeals court to rehear a case that officials of the three cities fear will affect their ordinances on rent control in mobile homes.

A three-judge panel for the U. S. 9th Circuit Court of Appeals concluded last month that Santa Barbara’s laws applying to rent control in mobile homes may violate the U. S. Constitution by giving tenants an interest in landlords’ property without just compensation for the landlords.

Judge Alex Kozinski wrote in his opinion for the appeals court that Williams and Jean Hall, owners of a mobile-home park, could win their challenge to the Santa Barbara ordinance if they can prove that their 71 tenants have gained money at the landlords’ expense because of rent control.

Kozinski also suggested that the trial court examine whether the rent control is achieving its purpose of providing reasonably priced housing.

Case Had Been Dismissed

U. S. District Judge Laughlin E. Waters of Los Angeles had dismissed the case, accepting the contention that courts have traditionally upheld rent-control laws that provide landlords with a fair return on their investment.

The decision “opens up the door for challenging all kinds of city legislation and certainly every mobile-home rent-control ordinance in the state,” said Rochelle Browne, a Los Angeles lawyer representing the cities supporting Santa Barbara.

Robert M. Myers, city attorney for Santa Monica, which is known for its strong rent control, said he is concerned that the decision may affect rent regulations for tenants other than those living in mobile homes. Santa Monica is among the cities requesting a rehearing of the appellate court decision.

“The court called into question whether there was an adequate basis to defend rent control,” Myers said. “The court was suggesting a new test to determine whether rent control is a good idea. That’s the part of the case that was particularly troubling to Santa Monica.”

Los Angeles rent control is tied to the local consumer price index and limits yearly increases to a maximum of 8% and a minimum of 3%. Rent control covers 68 mobile-home parks with about 6,000 spaces, according to Barbara Zeidman, director of the rent stabilization division of the city’s Community Development Department. Of those parks, 58 are in the San Fernando Valley, Zeidman said.

Simi Valley has six mobile-home parks under rent control, and Westlake Village has one.

Regulated in Many Cities

At least 40 cities in California regulate rents in mobile-home parks, according to Ken Baar, a Berkeley-based consultant on rent control.

Mobile-home parks generally rent out land and facilities--from electricity and running water to swimming pools and tennis courts--to tenants who have bought their own mobile homes to place on the site. Therefore, unlike apartment tenants, mobile-home residents can sell their dwellings to others.

Robert J. Jagiello, a Lake Tahoe attorney representing the Halls, contends that residents of mobile homes in rent-controlled parks can command a higher sale price for their dwellings than those who live in parks where there are no caps on rent.

Because vacancy rates at mobile-home parks are under 2% in California, the homes are rarely moved. Owners of mobile-home parks can veto the sale of a mobile home to someone they deem a bad credit risk. But, under state law, park owners cannot evict tenants of mobile homes unless they miss rent payments, bother their neighbors or violate other laws concerning mobile homes.

When owners of a mobile home sell it, Jagiello said, they actually sell “the right to occupy the landlord’s land.”

Kozinski wrote in his opinion: “In effect, the tenant is given an economic interest in the land that he can use, sell or give away at his pleasure; this interest (or its monetary equivalent) is the tenant’s to keep or use.”

The Santa Barbara law, enacted in 1984, applies solely to mobile homes. Voters twice rejected rent control on apartments, in 1978 and 1980, City Atty. Steven A. Amerikaner said. Apartment-rent control will again be on the ballot in November, Amerikaner said.

The City Council there authorized rent caps for mobile homes to alleviate a shortage of low- and moderate-income housing, Amerikaner said. Tenants requested the action; the Halls were among the leaders of the fight against it, Amerikaner said.

The Santa Barbara ordinance limits rent increases to 3% a year, or 75% of the annual increase in the consumer price index--whichever is greater. A landlord can request a higher increase, but, if a tenant refuses, the dispute is submitted to binding arbitration. When a mobile home is sold, the owner may impose an immediate 10% rent increase.

The Halls never requested a rent increase higher than that allowed by the law. “That really has nothing to do with it,” said Jagiello. “We’re not asking for a rent increase; we’re saying that the tenant is selling something that’s ours.”

Countered Browne: “I think any time you have price regulation, whether it’s the price of apartments or the price of milk, the consumer is really profiting.” Referring to that profit, she said, “What’s different here is that mobile-home owners get to sell theirs. But it’s not clear that this extra money is being taken from the park owner.

“After all,” she added, “the landlord invited these people to come and stay on his property, and he’s getting paid for it.” She said the value of the park owner’s property “has been going up too.”

Still, she agreed with Jagiello’s assessment that the chances of a rehearing are “less than monumental.” The cities asked for 10 Circuit Court judges to consider the case again.

If the appeals court turns down the request, “we have a choice, to appeal to the Supreme Court or proceed back to trial,” Amerikaner said.