The Maverick at Center of Mobile Home Rent Battle
Resting in the dairy farm country of northwestern Riverside County, the Swan Lake mobile home park once was a quiet refuge for many low- and middle-income retirees.
It had its problems, including odors from the nearby farms, but attractions such as the park’s moderate land rental charges kept the community filled with contented residents.
That tranquillity, however, was shattered after a partnership half-owned by Jeffrey A. Kaplan, a Los Angeles lawyer turned real estate maverick, took over Swan Lake in the late 1980s.
The new landlords soon demanded bigger annual rent increases. They pushed so hard, in fact, that Riverside County officials authorized construction of a new mobile home park at public expense largely to provide a sanctuary for financially squeezed Swan Lake residents. To the residents’ dismay, the county project later was scuttled--when Kaplan’s firm filed a lawsuit that threatened to hold up work for years.
Such tactics have made Kaplan, who owns interests in about 15 mobile home parks, a symbol of greed to many of his opponents and one of the most controversial park landlords in California. But now Kaplan, 49, is antagonizing even more of the state’s 1 million mobile home park dwellers.
He is the behind-the-scenes architect of an initiative on the state’s March 26 ballot that would bar all California communities from adopting new rent-control ordinances for mobile home parks. It also would phase out such laws in the roughly 100 communities that already have them.
Some critics fear that passage of the measure, Prop. 199, could unleash an upward spiral of rent increases that would drive many people out of their homes--as has already occurred, they say, in various Kaplan parks.
Supporters of the initiative offer three key arguments: People currently covered by rent control would be minimally affected; rent discounts would be provided in some cases to very-low-income park residents, and, most important, the measure would encourage the development of more mobile home parks, thereby lowering home purchase prices and expanding the state’s supply of badly needed affordable housing.
Still, given Kaplan’s history of warring with park residents over rent increases, upkeep and related issues, many critics say the arguments for his proposition are just a smoke screen. Once the threat of rent control is removed, the theory goes, unscrupulous landlords would have a freer hand.
“If you want to see what Jeff Kaplan has in mind for mobile home owners, just look at what’s happening in his own parks,” said Steve Hopcraft, the anti-Proposition 199 campaign strategist for the Golden State Mobilehome Owners League, the formidable lobbying group that represents park residents. Speaking at the league’s annual convention in January, Hopcraft asserted that Kaplan “knows if he wins, it means millions for him.”
Kaplan refused to be interviewed for this article. So did his lower-profile business partner, Thomas T. Tatum, with whom Kaplan runs his main firm, the Westwood-based Tatum-Kaplan Financial Group.
A clear picture of Kaplan’s stormy career, however, emerges in more than a dozen lawsuits and in the recollections of lawyers, park owners and others who have dealt with him. His story provides a window into an industry that, while unglamorous and fiercely litigious, also was hugely profitable in California until being crimped when the state’s real estate slump struck in the 1990s. And Kaplan’s tale reflects what is at stake in the Prop. 199 vote.
The resentment toward both Kaplan and Tatum is aggravated by an underlying economic tension in the mobile home park business. Namely, residents typically own their dwellings but they must pay rent to--and sometimes live at the mercy of--landlords such as Kaplan and Tatum who own the land their homes sit on.
“It’s akin to the feudal landlord structure you saw in England in the 16th century,” said Brooks M. London, a San Bernardino-based consultant who advises municipalities on mobile home park issues.
In contrast, London said, when someone living in an apartment is unhappy about a rent increase, “you rent a U-haul, buy some beer and have your friends help you move. You can’t do that in a mobile home park. The dilemma is magnified. These are not readily movable assets.”
Some park owners have learned the art of defusing tensions by dealing diplomatically with tenants and charging moderate rent increases. But by all accounts, Kaplan--short, wiry and engaging yet hot-tempered--has never taken that tack.
Kaplan is disliked even by some park landlords who support Prop. 199; they privately blame Kaplan’s tactics for inspiring many communities to adopt profit-shrinking rent-control ordinances in the first place.
“In this industry, there’s room to gouge,” said a Prop. 199 supporter who asked not to be identified. “People can’t take their house and walk away. Jeff pushed the limit in his parks, more than most of us think is right.”
The resulting animosity has fostered still-pending private lawsuits accusing Kaplan and Tatum partnerships of misleading customers into signing exorbitant land leases, allowing their parks to deteriorate into near-slums and threatening to evict residents who protested.
Moreover, the Santa Clara County district attorney’s office in December filed a complaint accusing two Tatum-Kaplan Financial Group partnerships in San Jose of duping customers--many of them unsophisticated in real estate matters--into signing high-rent, long-term leases that violated the city’s rent control law. An untold number of residents, the complaint alleges, have been forced to abandon their homes or sell them at distressed prices.
Arthur Grebow, a Beverly Hills lawyer representing Kaplan and Tatum against allegations of “slumlike” conditions at Swan Lake, provided a written statement saying that the parks’ owners “spend a large sum of money” every year on maintenance. “It is a well-maintained park and is certainly not in ‘slumlike’ condition.”
His statement added that “we do not know of a single instance in which any resident of Swan Lake was threatened with eviction for ‘complaining’ about park conditions.”
C. Brent Swanson, a lawyer representing the Tatum-Kaplan partnerships in San Jose against the complaint by the district attorney and two related lawsuits by homeowners, said in a statement that the litigation is politically motivated and “without any merit.”
Ron and Patty Bishop, a couple who bought a home in one of the San Jose parks for $44,000 in 1988, abandoned it last Thanksgiving after concluding that rising rents had made it impossible to sell and too expensive to live in. Monthly rents climbed from $540 initially to $964 last year, on top of their monthly mortgage payment of $413.
The Bishops and others now suing Tatum-Kaplan say that before they bought their mobile homes, the park managers assured them that they would be able to choose from several types of land leases. But after buyers went ahead with their purchases, “suddenly the other leases weren’t available,” said Ron Bishop, 49, the owner of a construction supply business.
“At that point, what are you going to do?” he said. “You really don’t have a choice.”
In addition, Bishop and other residents said they were misled about the size of future rent increases. “They really hoodwink a lot of people,” he said.
Kaplan and Tatum, along with being the target of numerous lawsuits, also use litigation as a weapon against their opponents.
For instance, they have fought for more than five years to stop residents of a park owned by another landlord in the San Diego suburb of Santee from buying their own community. The reason for the suit: Kaplan and Tatum have long wanted to buy the park too.
Robert A. Prahl, a lawyer for the residents, said his clients would like to run the park themselves to control their own destiny. “To our people, it’s darn personal. But to him [Kaplan], it’s just dollars and cents,” Prahl said.
Charles A. Bird, a lawyer for Kaplan’s firm, said his clients “believe that if they are able to close a deal, that it will be a profitable transaction. It is a very simple thing.”
Bird--who describes Kaplan as “a bright, financially astute fellow with a great sense of humor"--added that he doesn’t believe Kaplan feels uncomfortable fighting the tenants for the property. “If Jeff could make, say, $1 million on the transaction, do you walk away from a business transaction on the basis of sentiment? If everyone did that, you wouldn’t have an economy.”
After studying accounting at USC and earning a law degree at UC Berkeley, Kaplan went to work in Los Angeles as a real estate lawyer in the early 1970s. But soon, after getting acquainted with the mobile home business, he and Tatum began acquiring parks in Southern California and Santa Clara County.
The Tatum-Kaplan parks have been hurt by rising vacancies in recent years, but the financial impact on the firm isn’t clear.
Through the 1980s, however, the partnership prospered enormously. A snapshot of Kaplan’s finances is found in the court records from his long-running divorce battle with his estranged wife, Donna L. Kaplan, from whom he filed for divorce in December 1988 after 19 years of marriage.
The records include a 1989 financial statement from Kaplan that valued the couple’s equity in the mobile home park business at more than $11 million. Other documents suggest that he was earning well above $1 million a year in profits and management fees from his parks.
And Kaplan doesn’t live in anything resembling a mobile home; rather, he has a Bel-Air mansion that he bought for nearly $3.5 million after separating from his wife.
No matter how well business was going, however, Kaplan never was willing to stand pat. Impatient with the political moderates within the dominant lobbying group for California park owners--the Western Mobilehome Parkowners Assn.--Kaplan founded a hard-line breakaway group, the California Mobilehome Parkowners’ Alliance, in 1988.
Eventually, Kaplan conceived the idea of an anti-rent-control initiative, hired a lawyer to draft the proposition and bankrolled the successful petition drive to put it on the March ballot. But some park owners, given their hard feelings toward Kaplan’s tactics, at first were slow to join the cause.
Today, Kaplan holds no official position with the initiative campaign, but he is hugely influential. He and Tatum are Prop. 199’s two biggest financial backers, together contributing $254,000 and loaning another $240,000 to the petition drive and campaign.
Kaplan’s money, however, hasn’t won him friends in places such as Riverside County.
Lloyd Griffiths, the 78-year-old president of the Swan Lake homeowners’ association, said the friction began over rents soon after Tatum-Kaplan’s managers took over. In 1989, angry residents invoked a county rent review procedure to get a 12% increase proposed by Tatum-Kaplan’s managers for many homeowners reduced to 6%.
But, Griffiths said, some incoming residents were less fortunate. He said Tatum-Kaplan managed to coax newcomers into signing leases with controversial “unilateral renewal” clauses.
The clauses, later outlawed by the state Legislature, permitted the landlords to unilaterally extend the agreements from the original five-year term to up to 25 years. What’s more, Griffiths said, the landlords’ proposed rent increases were “confiscatory.”
A 1991 lease, for example, called for annual hikes amounting to 8% or the rate of inflation--whichever was higher--along with extra 10% increases every five years. It would have boosted rents from $510 a month to at least $4,600 a month in the 25th year.
“Those guys are as avaricious as hell,” Griffiths said. “They want every dime they can get.”
Tatum-Kaplan lawyer Grebow said all of the Swan Lake long-term leases were either “consensual or obtained in compliance with applicable law” or both.
Sympathetic to the community’s complaints, Riverside County officials decided to build a neighboring park called Cygnet, a term meaning “young swan,” largely for senior citizens hoping to flee Swan Lake. But before construction began, Tatum-Kaplan derailed the project with a lawsuit that claimed Cygnet was conceived with the “intent of destroying Swan Lake as a competitor.”
Meanwhile, abandoned homes are spreading throughout Swan Lake--the result, Griffiths says, of foreclosures stemming from the escalating rents.
But why would Tatum-Kaplan want to drive out residents? One possibility is raised in the Santa Clara County district attorney’s complaint against the Tatum-Kaplan partnerships and related defendants in San Jose.
The complaint charges, without specifying details, that the Tatum-Kaplan partnerships “are purchasing mobile homes abandoned by residents who cannot afford the rent and reselling them for a profit. By raising rents to a point where tenants abandon their homes, [the Tatum-Kaplan partnerships] are not only increasing the residents’ injuries . . . but are also reaping additional profits for themselves.”