Mobile Home Parks’ Suit Seeks $3 Million

Against the city attorney’s advice, the Malibu City Council in 1991 adopted one of the state’s strictest rent control laws, designed in part to protect tenants in the city’s two mobile home parks from large rent increases and to correct alleged rent gouging.

Now, not only has a federal judge struck down several key provisions of the ordinance, including a rent rollback, but the owners of Malibu’s two parks are suing the city for $3 million in back rent and other losses.

“That is one-third of our budget,” said City Atty. Christi Hogin, who added that liability insurance would not cover the claim. If the damage suit goes to trial, and “if they are successful and we can’t overturn it, then we’ll pay it by cutting the Sheriff’s (Department service), parks and recreation, and we’ll stop filling in potholes,” she said.

Two weeks ago, U.S. District Judge Mariana R. Pfaelzer ordered the city to stop enforcing provisions of the law that she had deemed unconstitutional, such as a rent rollback to 1984 base levels--before such considerations as cost-of-living increases were figured in--and a two-year rent freeze.

Pfaelzer also told the city to pay the legal fees of the owners of Paradise Cove and Point Dume Club and overturned portions of the law that barred owners from raising rents for three years when leases of more than one year expire.

Pfaelzer ruled that although the city had the right to protect low-income residents by limiting future rent increases, the city hadn’t proved that the rents were too high or had been raised unfairly. The law, according to Pfaelzer, had prevented the park owners from getting a fair return on their property.

There are about 550 mobile homes in the two seaside parks, where lease spaces range from $200 to $1,500 a month, depending on ocean views.

The park owners’ lawsuit to collect damages, filed in federal court in Los Angeles, is scheduled to be heard Dec. 6.

The park owners will request about $1 million in attorneys’ fees for the costs of state and federal lawsuits. A jury will decide on the dollar amount of damages. The Kissel Co., which owns Paradise Cove, will be asking for about $1.5 million in back rent, said Garrett L. Hanken, the company’s attorney. The Adamson Cos., which owns Point Dume, will be asking for $300,000 to $600,000 in back payments, according to Tom Gibbs, the company’s attorney.

The city hopes to avert a trial by settling out of court.

Hogin said the city decided to seek a settlement because of legal costs--it has spent $400,000, making it the most costly litigation since the city incorporated three years ago--and the belief that an appeal would not be successful.

On Monday, the City Council voted 4 to 1 to approve a proposal that Hogin will present to the park owners next week. It suggests that owners be paid back rent in monthly installments over two years from tenants. Councilwoman Carolyn Van Horn dissented.

The proposal, which has drawn mixed reaction from residents, also includes a promise to rezone the lower portion of Paradise Cove mobile home park for commercial use on the condition that the Kissel Co., the owner of the park, sells the upper section of the park to the residents, who have wanted to buy the park for several years.

About 97 trailers and mobile homes in the lower park would have to be relocated to other areas in Paradise Cove at the park owner’s expense. That clause of the proposal has alarmed residents who would be directly affected by the rezoning.

“We feel like we’re being used as sacrificial lambs to settle a lawsuit,” said Andrea Sharp, who lives in the lower portion of the park and worries that there won’t be enough room for all the coaches and trailers in other areas of Paradise Cove. “There is one couple who invested $140,000 in their mobile home two or three months ago, and then heard about this potential rezoning.”

The court ruling was effective immediately, enabling park owners to adjust rents to the rates in effect as of March 28, 1991, when the City Council adopted a moratorium on mobile home park rent increases. An additional 75% of the consumer price index, or 3% a year, whichever is higher, will be added to 1991 base-rent levels for each subsequent year until the present to calculate current rates.

Retiree Margaret Jacobs, who will pay $100 more a month for her lease in Point Dume, echoes the sentiment of many other seniors citizens who feel stuck: “The park has gone downhill in terms of amenities. We’ve been gouged. But we will pay it. My husband is 90 and can’t be moved.”