I thought Housing inflation was hitting only rich areas:
Immobile positions
Mobile home park owners, tenants face off over rents
October 15, 2000
By MARY FRICKER
Press Democrat Staff Writer
While the Sonoma County housing market reels from soaring prices, the
county's most affordable sector, mobile homes, is in its own state of turmoil.
There hasn't been a new park established in more than 20 years, vacancies
are nonexistent, waiting lists are long, space rents and mobile home resale
prices are rising and lawsuits are flying.
Both park residents and park owners lament the discord.
"If I had it to do over again, I wouldn't do it," John Almquist said about his
purchase of a mobile home in Windsor in 1991. "I like the surroundings and
the people and everything, but we're in turmoil all the time."
Tension in Sonoma County's mobile home parks is not new. But as the
booming economy bumps up against the rent control laws that put a lid on
all Sonoma County parks, it's stressing the relationship between park
owners and residents like never before.
Rent control is a technique used widely in California to protect mobile home
owners from sharp monthly space rent increases, mainly because their
homes are hard to move.
The tension came to a head in August when an arbitrator awarded the
owners of the Shamrock Mobilehome Park in Windsor the highest monthly
rent increase ever permitted for mobile home spaces since rent control
began in Sonoma County -- a 34 percent increase of $110 a month on an
average base rent of $322. The park has 126 spaces.
Residents, all of them seniors and some on limited Social Security incomes,
have appealed the ruling. Park owners aren't happy either, because they had
sought a $175 hike.
The Shamrock decision came just two months after a federal judge ruled
that part of the Cotati mobile home rent control ordinance is
unconstitutional. The city has appealed.
Other park owners recently sued the City of Rohnert Park over the
constitutionality of its ordinance, and in some cases they're warning residents
to be prepared to pay up to $20,000 each in back rent if the park owners
win the suit. The case is pending.
Meanwhile, this summer the Rancho Verde Mobilehome Park in Rohnert
Park said it will consider closing its park and using the land for something
else -- which would mean a loss of 300 out of the county's 8,313 mobile
home spaces. In response, the city is developing a conversion ordinance
that would establish the conditions a park owner would have to meet to
close a park.
All of these events threaten to further limit access to the county's most
affordable housing at a time when little else affordable is available.
Average two-bedroom apartment rents have risen 30 percent, to more than
$1,000, in the past year. The median price of resale houses is up 26
percent, to $325,500, condominiums are up 35 percent, to $177,000, and
new homes are up 20 percent, to $313,500.
Meanwhile, a buyer can get a nice two-bedroom mobile home for $80,000,
and his space rent -- when a space is available -- might be $400 a month,
plus utilities, cable TV, garbage and other fees.
But there's no hope of getting more mobile home parks under current
conditions, according to Ron Wollmer, a Sonoma resident who has owned
Windsor Mobile Country Club, the county's largest mobile home park,
since he built it in 1973. In the past five years, only one park has been built
in California, he said.
"It's such a shame. Here we are, trying to get affordable housing, and here's
the easiest way to do it, and there's no way a developer will come in,"
Wollmer said.
High demand for this relatively affordable housing, and no new parks, are
translating into near-zero vacancies.
"There's not a vacancy in town," said Wollmer. "Out of 336 spaces, we
have four homes for sale. They'll go in a week or so."
Some mobile home owners said they feel trapped, because they'd have to
pay about $5,000 just to move their home a few blocks away, and even if
they could afford the move, they'd have a hard time finding a vacant spot.
They often face competition from manufactured home dealers who try to
rent spaces and put a new home there to sell - even if they first have to buy
and discard an older home already on the lot.
Collision course
The tight market and heightened tensions threaten to set mobile home
owners with limited incomes on a collision course with park owners
unhappy with their investment returns.
Residents say they realize park owners need profits, but not excessive
profits. Park owners say they realize low-income residents need help, but
they think society as a whole should share the load.
"If there are seniors in Sonoma County falling through the cracks, all of us
should participate in helping those people. The park owner shouldn't be the
only one," said Doug Johnson, Northern California representative for the
state's largest park owners' association, the Western Manufactured Housing
Communities Association.
At the core of the disputes is rent control. Here's how it works in Sonoma
County.
All spaces in Sonoma County are covered by city or county rent control
ordinances.
The laws vary slightly, but they all allow the park owner an automatic annual
rent increase equal to 80 to 100 percent of either the U.S. or Bay Area
inflation rate.
The Bay Area inflation rate last year was 4.2 percent. The U.S. inflation rate
was 2.7 percent. Most jurisdictions put a cap of 4 to 7 percent on allowed
increases.
Most of the laws do not let park owners adjust rents to market rates when a
mobile home owner sells to a new owner, and this is a major bone of
contention for park owners.
"When someone moves out, and the person moving in bought the home fully
aware of what the rents could be, those rents should be able to go to
market value," Johnson said.
Although all Sonoma County spaces are covered by a rent control
ordinance, park owners have been able to exempt almost half of the spaces,
mainly by getting residents to sign long-term leases. Park owners also buy
mobile homes themselves and lease them to residents along with the space.
Under state law, spaces leased for at least one year and mobile homes
owned by park owners are exempt from rent control.
Park residents have argued against both of these tactics at legislative
hearings in Sacramento.
They say, for example, that residents often sign the long-term leases without
realizing they are giving up their right to rent control.
Long-term leases typically adjust upward once or twice a year and may be
up to $150 a month higher than rent-control spaces, but some tenants prefer
the certainty of a lease. State law lets tenants choose to return to rent
control when their lease expires.
Other ways
Rent control ordinances offer owners other ways to improve their incomes.
Owners can charge residents for the cost of capital improvements if they
can justify and document the costs.
And owners can raise rents to get a "reasonable" rate of return, even if that
exceeds inflation. But they have to prove their case -- often with two years
of financial data.
That's what the Shamrock Mobilehome Park in Windsor did. The owners
took their case before arbitrator John LemMon, and he decided a
$110-a-month increase -- which he said was a 11.65 percent return --
would be fair.
Calculating a fair rate of return is controversial.
The most commonly accepted way is to find out what the park's net
operating income was just prior to rent control -- that is, revenues minus
expenses -- and then adjust that for inflation.
Another way is to grant an 8 to 12 percent annual return on the money the
park owner invested in the park at the beginning, adjusted for inflation.
In the Shamrock case, the owners, who are from Arcadia, and their
attorney Robert Coldren also raised one of the biggest bones of contention
for park owners today.
They pointed out that owners of mobile homes on rent-controlled spaces
can often sell their homes for more than the National Automobile Dealers
Association Bluebook value because of the high demand for rent-controlled
spaces, especially in today's hot real estate market.
Park owners argue this rise in value belongs to them and is an
unconstitutional taking of private property. A federal judge agreed when he
found the Cotati rent control ordinance unconstitutional in June.
Residents fighting back
Vowing to fight the Shamrock rent increase, residents have raised $6,500 --
including a $1,000 contribution from the 500-member Sonoma County
Mobilehome Owners Association -- for a legal fund that is chaired by
Almquist.
They believe they're waging a battle on behalf of all mobile home owners in
Sonoma County, because until now arbitrations have been rare -- maybe
three a year -- and increases have been modest. Recent examples are park
owners who asked for a $60-a-month increase and got $9.44. A $200
request got zero; a $135 request got $27.
"If we should lose this, other park owners will do the same thing. The
devastation will just be horrible," said Shamrock resident Bonnie Vegod.
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