Santa Monica and Los Angeles have joined 18 other cities asking a federal appeals court to rehear a case that the cities fear will affect mobile home rent control ordinances around the state.
A three-judge panel for the U.S. 9th Circuit Court of Appeals concluded last month that Santa Barbara's mobile home rent control may violate the U.S. Constitution by giving tenants an interest in landlords' property without just compensation for the landlords.
Must Prove Tenants Profited
Judge Alex Kozinski wrote in his opinion for the appeals court that mobile home park owners Williams and Jean Hall 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 law is achieving its purpose of providing affordable housing.
U.S. District Judge Laughlin 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 18 cities supporting Santa Barbara.
Santa Monica City Atty. Robert M. Myers said he is concerned that the decision may affect rent regulations for other tenants as well. "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."
There are two mobile home parks in Santa Monica with a total of about 150 spaces under rent controls, said Howell Tumlin, administrator of the city's Rent Control Board. In Los Angeles, there are about 68 parks with about 6,500 spaces, said Barbara Bonino, assistant director of the Rent Stabilization Division of the city's Community Development Department. Los Angeles parks are scattered about the city, from Pacific Palisades to the San Fernando Valley to San Pedro.
Other cities backing the request for a rehearing include Westlake Village, Oxnard, Ventura, Simi Valley, Carson, West Covina and Hemet.
At least 40 cities in California regulate rents in mobile home parks, according to Ken Baar, a Berkeley-based rent control consultant. Mobile home parks generally rent 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 whose mobile homes are located in parks under rent control can command a higher price for their dwellings than those who live in parks where there are no caps on rent.
Because mobile home park vacancy rates are under 2% in California, the houses are rarely moved. Owners can veto the sale of a coach to someone they deem a bad credit risk. But under state law, mobile home tenants cannot be evicted from their site unless they miss rent payments, bother their neighbors or violate other laws concerning mobile homes.
"What did you sell? You sold the right to occupy the landlord's land," Jagiello said in an interview.
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 rejected apartment rent control twice, 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 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 coach 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. What's different here is that mobile home owners get to sell their (profit). 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. The park owner's property has been going up (in value) 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 (U.S.) Supreme Court or proceed back to trial," Amerikaner said.