AGENDA - City of Calimesa

Transcription

AGENDA - City of Calimesa
City of Calimesa
Regular Meeting of the City Council
AGENDA
Tuesday, July 5, 2016
6:00 p.m.
Norton Younglove Multipurpose Senior Center
908 Park Avenue, Calimesa, CA 92320
Jeff Hewitt, Mayor  Joyce McIntire, Mayor Pro Tem
Bill Davis, Council Member  Jim Hyatt, Council Member  Ella Zanowic, Council Member
Bonnie Johnson, City Manager  Kevin Ennis, City Attorney
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in a City meeting
or other services offered by this City, please contact the City Clerk’s Office, (909) 795-9801. Notification of at least
48 hours prior to the meeting or time when services are needed will assist the City staff in assuring that reasonable
arrangements can be made to provide accessibility to the meeting or service.
Any public writings distributed by the City to at least a majority of the Council Members regarding any item on this
regular meeting agenda will be made available at the public counter at City Hall located at 908 Park Avenue,
Calimesa, CA 92320
ANNOUNCEMENT REGARDING SPEAKER SLIPS
Anyone wishing to address the City Council either during “Communications from the Public” or on any item on the agenda should fill
out a blue speaker slip and give that slip to the City Clerk prior to the item being heard. Please write the number of the agenda
item or the subject of your presentation on the slip. Please observe a time limit of three (3) minutes when giving your
presentation. When called upon, please step forward to the microphone, state your name for the record, whom you represent and
any statement you wish to make. Please be advised that you may not defer your three (3) minutes to another speaker.
CALL TO ORDER
ROLL CALL:
MAYOR HEWITT, MAYOR PRO TEM MCINTIRE, COUNCIL
MEMBER DAVIS, COUNCIL MEMBER HYATT, COUNCIL
MEMBER ZANOWIC.
STAFF:
CITY MANAGER JOHNSON, CITY ATTORNEY ENNIS, CITY
CLERK GERDES, PUBLIC WORKS DIRECTOR FRENCH,
COMMUNITY DEVELOPMENT DIRECTOR GARDNER, CITY
ENGINEER THORNTON, FIRE CHIEF SMITH AND POLICE
CHIEF BURCH.
PLEDGE OF ALLEGIANCE
COMMUNICATIONS FROM THE PUBLIC
Anyone wishing to address the Council on any item within the Council’s jurisdiction that is not on the agenda may do so at this time.
This is not a time for City Council discussion of non-agenda items. After receiving public comments, Council Members or staff, after
being recognized by the Mayor, may briefly respond to statements made by the public or questions posed by the public. In addition,
Council Members may ask questions for clarification or make a referral to staff for factual information to be reported back to the
Council at a later meeting.
APPROVAL OF THE AGENDA
RECOMMENDATION: Move to approve the agenda
Motion__________________ Second__________________ Vote_________________
Regular Meeting of the Calimesa City Council
July 5, 2016
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CONSENT CALENDAR
The following Consent Calendar items are expected to be routine and non-controversial. Council will act
upon them at one time without discussion. Any Council Member or staff member may request removal of
an item from the Consent Calendar for discussion.
1.
APPROVAL OF CITY COUNCIL ACTION MINUTES. Page 5
a) June 20, 2016 Regular City Council Meeting Action Minutes.
2.
RECEIVE AND FILE CITY COMMISSION & BOARD MINUTES. Page 12
a) There are no minutes ready for approval at this time.
3.
APPROVAL OF WARRANT REGISTERS. Page 13
a) Check Register Report with a total of $595,310.39 (Check Nos. 30153 to 30219)
b) June 30, 2016 Payroll of $27,513.68.
4.
WAIVE FULL READING OF ANY PROPOSED ORDINANCES ON THE
AGENDA. Page 19
This permits reading the title only in lieu of reciting the entire text of the
Ordinances. This does not take policy action on the Ordinances or approve or
disapprove any Ordinances on the agenda.
5.
AWARD OF CONTRACT FOR ADMINISTRATION OF THE CITY’S
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDED HOUSING
REHABILITATION PROGRAM Page 20
RECOMMENDATION: That the City Council:
1. Approval to enter into a professional services agreement with Michael Baker
International to provide Owner-Occupied Housing Rehabilitation Program
Administration for the City’s CDBG Program.
2. Approval of Resolution 2016-20, a resolution of the City of Calimesa California
amending the 2016-17 Budget to include an appropriation and related revenue
for the Community Development Block Grant Funded Housing Rehabilitation
Program
CHIEF OF POLICE COMMENTS & REPORTS
FIRE CHIEF COMMENTS & REPORTS
MAYOR & COUNCIL MEMBER REPORTING OF COUNTY & REGIONAL MEETINGS
This is the time for comments, announcements and/or reports on meetings attended at public expense as required by AB 1234.
Regular Meeting of the Calimesa City Council
July 5, 2016
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PUBLIC HEARINGS
The recommended order of business for the Public Hearing is:
1. Open the Public Hearing
2. Introduction and Opening Comments
a.
b.
c.
d.
e.
f.
3.
Staff Report on general issues (background, Ordinance and procedures)
Appellant Presentation on general issues
Park Resident Representatives’ Presentation on general issues
Public Comment
Appellant’s Reply on general issues
City Council questions to all parties
Arguments on Appeal (recommendation for numbers 3 - 6 to occur at a continued public
hearing; date and time to be determined by City Council)
a. Arguments in Favor and Against Appeal
i. Appellant’s Argument in favor of Appeal
ii. Park Resident Representatives’ Argument in response to Appeal
iii. Public Comment (for those who did not speak on July 5, 2016)
iv. Staff’s Argument in response to Appeal
v. City Council questions to all parties regarding issues raised in Appeal and
Responses to Appeal
b. Rebuttal Arguments
i. Rebuttal by Appellant
ii. Rebuttal by Park Resident Representatives
iii. Rebuttal by Staff
c.
Closing Arguments
i. Staff Closing Argument
ii. Park Resident Representatives Closing Argument
iii. Appellant Closing Argument
4. Public hearing closed
5. City Council Discussion and Deliberation
6. City Council Motions and Votes
Speakers are encouraged to be brief and remain within the established time limit of three (3) minutes per speaker. Once
the public hearing has been closed, no further testimony will be taken.
6.
PUBLIC HEARING: APPEAL OF THE DECISION OF THE CALIMESA
MOBILE HOME RENT STABILIZATION BOARD AS ADOPTED BY MHRSB
RESOLUTION NO. 2016-01 DENYING THE SPECIAL RENT INCREASE
PETITION AND TEMPORARY RENT INCREASE PETITION FILED BY AVMGH
THREE-GOLDEN PALMS LIMITED PARTNERSHIP PURSUANT TO THE CITY
OF CALIMESA MOBILE HOME RENT STABILIZATION ORDINANCE,
CHAPTER 9.05, SECTIONS 9.05.100(D) AND (F) AND SECTION 9.05.140 OF
THE CALIMESA MUNICIPAL CODE. Page 37
RECOMMENDATION: That the City Council open the public hearing, have the
Introduction and Opening comments including presentation of general issues by
Staff, Appellant AVMGH Three-Golden Palms Limited Partnership, and the Park
Resident Representatives; and then continue the public hearing to a date and time
certain for presentation of the arguments in favor and against the Appeal; City
Council discussion and deliberations; and action.
Regular Meeting of the Calimesa City Council
July 5, 2016
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CONVENE JOINT CITY COUNCIL AND SUCCESSOR AGENCY TO THE CALIMESA
REDEVELOPMENT AGENCY MEETING
JOINT CC-CSA CONSENT ITEMS
1.
FOURTH AMENDMENT TO AGREEMENT FOR LEGAL SERVICES Page 190
RECOMMENDATION: That the City Council and the Agency Board of Directors
approve the Fourth Amendment to Agreement for Legal Services with Richards,
Watson & Gershon.
ADJOURN THE SUCCESSOR AGENCY TO THE CALIMESA REDEVELOPMENT
AGENCY AND RECONVENE CITY COUNCIL
COUNCIL MEMBERS’ COMMENTS & REPORTS
This is the time for additional general comments, announcements, reports on meetings attended at public expense as required by
AB 1234, requests of staff, and other issues of concern to Council Members may be presented briefly at this time. The Council may
not legally take action on any item presented at this time other than to direct staff to investigate a complaint or place an item on a
future agenda unless (1) by a majority vote, the Council determines that an emergency situation exists, as defined by Government
Code § 54956.5 or (2) by a four-fifths vote, the Council determines that there is a need for immediate action and the need for action
arose subsequent to the agenda being posted as required by Government Code § 54954.2(b).
CITY MANAGER COMMENTS & REPORTS
CLOSED SESSION
A. CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION
Pursuant to Paragraph (1) of Subdivision (d) of Government Code Section 54956.9
Name of Case: AVMGH Three-Golden Palms Limited Partnership V. City of Calimesa
– Superior Court Case No. RIC1600278
ADJOURNMENT
Adjourn to the Regular Meeting of the City Council on Monday, July 18, 2016 at 6:00
p.m.
Regular Meeting of the Calimesa City Council
July 5, 2016
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Agenda Item No. 6
STAFF REPORT
CITY OF CALIMESA
CITY COUNCIL MEETING
SUBJECT:
PUBLIC HEARING: Appeal of the decision of the Calimesa
Mobile Home Rent Stabilization Board as adopted by MHRSB
Resolution No. 2016-01, denying the Special Rent Increase
Petition and Temporary Rent Increase Petition filed by
AVMGH Three-Golden Palms Limited Partnership pursuant to
the City of Calimesa Mobile Home Rent Stabilization
Ordinance, Chapter 9.05, Sections 9.05.100(D) and (F) and
Section 9.05.140 of the Calimesa Municipal Code.
APPELLANT:
AVMGH Three-Golden Palms Limited Partnership
LOCATION:
Rancho Calimesa Mobile Home Ranch, 10320 Calimesa
Boulevard, Calimesa, California 92320
MEETING DATE:
July 5, 2016
PREPARED BY:
Darlene Gerdes, City Clerk/Rent Administrator
Amy Greyson, Assistant City Attorney
RECOMMENDATION: That the City Council conduct a Public Hearing on the appeal filed by
AVMGH Three-Golden Palms Limited Partnership (“AVMGH”) from the decision of the Calimesa
Mobile Home Rent Stabilization Board denying AVMGH’s Petition for a Special Rent Increase
and Petition for a Temporary Rent Increase. (Attachment 1) Staff recommends that the public
hearing on the Appeal be conducted in accordance with the following procedures:
1. Open the Public Hearing
2. Introduction and Opening Comments
a. Staff Report on general issues (background, Ordinance and procedures);
b. Appellant Presentation on general issues
c. Park Resident Representatives’ Presentation on general issues
d. Public Comment
e. Appellant’s Reply on general issues
f. City Council questions to all parties
3. Arguments on Appeal (recommendation for Part #3-6 to occur at continued public
hearing; date and time to be determined by City Council)
a. Arguments in Favor and Against Appeal
i.
Appellant’s Argument in favor of Appeal
ii.
Park Resident Representatives’ Argument in response to Appeal
iii.
Public Comment (for those who did not speak on July 5, 2016)
iv.
Staff’s Argument in response to Appeal
Page 37 of 194
Appeal of the decision of the Mobile Home Rent Stabilization Board
As adopted by MHRSB Resolution No. 2016-01
City Council Meeting of July 5, 2016
Page 2
v.
City Council questions to all parties regarding issues raised in Appeal and
Responses to Appeal
b. Rebuttal Arguments
i.
Rebuttal by Appellant
ii.
Rebuttal by Park Resident Representatives
iii.
Rebuttal by Staff
c. Closing Arguments
i.
Staff Closing Argument
ii.
Park Resident Representatives Closing Argument
iii.
Appellant Closing Argument
4. Public hearing closed
5. City Council Discussion and Deliberation
6. City Council Motions and votes:
a. Alternative #1:
i.
Adopt a motion granting the appeal and approving a Special Rent
Increase for Appellant pursuant to CMC § 9.05.100(D) (Maintenance of
Net Operating Income Rent Increase); or CMC § 9.05.100(F) (Fair Return
Rent Increase) based on stated findings of fact and conclusions, and
ii.
Adopt a motion granting the appeal and approving a Temporary Rent
Increase to reimburse Appellant for the costs incurred in preparing and
presenting the Petition and Appeal, pursuant to CMC § 9.05.140, based
on stated findings of fact and conclusions
or
b. Alternative #2:
i.
Adopt a motion denying the appeal and upholding the decision of the
Mobile Home Rent Stabilization Board denying the Special Rent Increase
filed by AVMGH Three-Golden Palms Limited Partnership pursuant to
CMC § 9.05.100(D) and (F), based on stated findings of fact and
conclusions; and
ii.
Adopt a motion denying the appeal and upholding the decision of the
Board denying the Temporary Rent Increase for reimbursement of the
costs incurred by Appellant in preparing and presenting the Special Rent
Increase Petition to the Board and City Council based on stated findings
of fact and conclusions.
c. Adopt a Motion authorizing special counsel to the City Council to prepare a
written Resolution memorializing the City Council’s findings and decisions on the
Appeal.
Page 38 of 194
Appeal of the decision of the Mobile Home Rent Stabilization Board
As adopted by MHRSB Resolution No. 2016-01
City Council Meeting of July 5, 2016
Page 3
Pursuant to Rule 9.3 of the Administrative Rules, no new written or oral evidence may be
submitted to the City Council during the Appeal. The Appeal is limited to the record of
proceedings before the Board, including the written staff reports, exhibits, reports, and protests
which were admitted into evidence and considered by the Board during the public hearing on
the petition, the resolution of the Board, the Board minutes, and the verbatim transcripts of the
proceedings before the Board. The Board’s record of proceedings has been provided to the City
Council and parties, and made available to the public.
Due to the complexity of the Special Rent Increase Petition and Temporary Rent Increase
Petition, and the size of the Board record, Staff recommends that the City Council break the
public hearing up into at least two sessions. This process would allow the City Council and all
participants’ sufficient time to prepare and respond to the arguments in favor of and against the
Appeal, including submittal of any additional briefs and/or written responses to the parties’
contentions on appeal. Staff proposes that the first two parts – opening the public hearing and
introduction of the general issues -- take place on July 5, 2016. Staff recommends that the City
Council then continue the public hearing to another date and time certain for Parts #3 through
#6, the presentation of the parties’ written and oral arguments in support of and in opposition to
the Appeal, rebuttal and closing arguments; and City Council discussion, deliberation and
action. Staff also recommends that the City Council specify deadlines for submittal of written
responses to the Appeal by Staff, the Park Resident Representatives and any other residents,
and submittal of written rebuttal by Appellant. Staff also recommends that the City Council set
time limits on the parties’ presentations on each of the matters during the public hearing on the
Appeal.
Depending on the time required for the arguments in favor of and against the Appeal, the City
Council may also wish to consider conducting its deliberations and decision at the conclusion of
the arguments, or alternatively continue the matter to another date and time certain to complete
the proceedings on the Appeal. Pursuant to CMC § 9.05.120(G), the City Council shall issue its
decision in writing, including findings of fact, within 45 days of the commencement of the public
hearing, or no later than Monday, August 15, 2016, unless the City Council extends the time
limits for reasonable cause.
BACKGROUND: This Appeal has been filed by Bruce A. Hohn, as authorized representative of
AVMGH Three-Golden Palms Limited Partnership (“AVMGH” or “Park Owner”) with respect to
the decision of the Mobile Home Rent Stabilization Board (“Board”) denying AVMGH’s Petition
for Special Rent Increase (“Special Rent Increase Petition” or “Petition”), for Rancho Calimesa
Mobile Home Ranch (“the Park” or “Rancho Calimesa”). AVMGH filed the Petition pursuant to
the City’s Mobile Home Rent Stabilization Ordinance (Chapter 9.05, Sections 9.05.010 through
9.05.190 of the Calimesa Municipal Code) (the “Ordinance”), and the Administrative Rules for
Implementation of the Mobile Home Rent Stabilization Ordinance (“Rules”). In its Petition,
AVMGH contends that a Special Rent Increase is required under CMC § 9.05.100(D) or (F) to
provide a fair return.
In the original Petition, AVMGH proposed three alternative rent increases:

A Fair Return Rent Increase of $218.95, pursuant to Section 9.04.100(F) of the
Ordinance on the basis that this Special Rent increase is required in order to provide
the Park Owner with a fair return on its investment.
Page 39 of 194
Appeal of the decision of the Mobile Home Rent Stabilization Board
As adopted by MHRSB Resolution No. 2016-01
City Council Meeting of July 5, 2016
Page 4

A Maintenance of Net Operating Income (“MNOI”) Rent Increase for 204 spaces, of
$99.52, calculated under Section 9.05.100(D) of the Ordinance, using 80% of the
increase in the CPI since the Base Year (July 1, 1991 through June 30, 1992).

An MNOI Rent Increase for 204 spaces of $119.40, calculated using 100% of the
increase in CPI since the Base Year.
During the public hearing, AVMGH presented several modified approaches to determining a
Fair Return Rent Increase for the Park. Before the end of the public hearing, during their
rebuttal, AVMGH modified its Petition to request that the Board grant a Fair Return Rent
Increase of $100.80, using a capitalization rate of 7.25% on its inflation-adjusted purchase price
of $8,894.379.
In support of its Special Rent Increase Petition, AVMGH provided reports prepared by three
experts, Edward Gogin, CPA, appraiser John P. Neet, MAI and Michael St. John. AVMGH also
filed a Temporary Rent Increase for reimbursement of its petition and public hearing costs
before the Board and its Appeal to the City Council, pursuant to CMC § 9.05.190.
The City retained two experts, Dr. Kenneth Baar, Ph.D, J.D., and James Brabant, MAI, of
Anderson & Brabant, Inc. to assist Staff in evaluating the Petition. According to a report
prepared by Dr. Baar, AVMGH is already earning a fair return under the MNOI methodology as
provided in Section 9.05.100(D) of the Ordinance, and that there is no basis to grant any other
Special Rent Increase. Mr. Brabant raised questions about the analysis provided by AVMGH’s
experts, Mr. Gogin and Mr. Neet, in support of AVMGH’s proposed Special Rent Increase.
The public hearing on the Special Rent Increase Petition and Temporary Rent Increase Petition
was held over seven days, on March 15, 16, 17, and 23, 2016, and May 10, 18, and 31, 2016.
At the public hearing, the City was represented by Darlene Gerdes, City Clerk/Rent
Administrator, and Amy Greyson, Assistant City Attorney, and the City presented three
witnesses, Dr. Baar, Mr. Brabant, and Ms. Gerdes. The Board was represented by Donald
Lincoln, Esq. The Park Owner was represented by Bruce A. Hohn, on behalf of AVMGH ThreeGolden Palms Limited Partnership, and Boyd L. Hill, Esq., of Hart, King, A Professional
Corporation. AVMGH called three witnesses, Mr. Hohn, Mr. Gogin, and Mr. Neet. The residents
were represented by Robin Minnear, Pete Gallant and Tim Sheahan, National Manufactured
Home Owners Association President. Numerous residents of the Park also testified during the
public hearing.
The Board admitted documentation into evidence at the request of the parties, which is provided
to the City Council as the Board record of proceedings. The admitted exhibits and other matters
included in this Board record of proceedings (“Board record”) include the following:




Petitioner (Park Owner) Exhibits A through N1
Petitioner (Park Owner) Attachments 1, 2 and 3
Staff (City) Exhibits 1 through 46
Staff (City) Attachments 1 through 9
1
The Park Owner originally offered an additional exhibit, Exhibit O, into evidence. The Board did not
admit Exhibit O into evidence and it is not part of the record of proceedings or the evidence that may be
considered by the City Council on the Appeal.
Page 40 of 194
Appeal of the decision of the Mobile Home Rent Stabilization Board
As adopted by MHRSB Resolution No. 2016-01
City Council Meeting of July 5, 2016
Page 5



Park Resident Representative Exhibits I through VI
Park Resident Representative Attachments 1 and 2
Transcript of Board Hearing (seven transcripts and disks)
All exhibits, and the complete transcript of the Board hearing, has been provided to the
City Council and all parties as the Board’s record of proceedings. The entire Board
record has also been made available to the public.
At the May 18, 2016 session of the public hearing, public testimony was completed and closing
comments were presented by City staff, AVMGH and the Park Resident Representatives. The
Board then closed the public hearing and commenced deliberations, and thereafter voted to
deny the Special Rent Increase Petition. The Board found that AVMGH failed to demonstrate
that AVMGH is entitled to any Special Rent Increase under Sections 9.05.100(D) or (F) of the
Ordinance. Because the Board denied the Special Rent Increase Petition, the Board also
denied the Park Owner’s Temporary Rent Increase Petition under Section 9.05.140 of the
Ordinance, because AVMGH was not the prevailing party on its request for a Special Rent
Increase. The Board then directed City staff to prepare a resolution memorializing the Board’s
tentative decision and to bring the proposed resolution back for Board approval.
Staff prepared a proposed resolution, and circulated it to all parties as well as Board legal
counsel Don Lincoln. Thereafter, on May 31, 2016 the Board adopted MHRSB Resolution No.
2016-01, denying the Special Rent Increase Petition and Temporary Rent Increase Petition filed
by AVMGH pursuant to Sections 9.05.100(D) and (F) and Section 9.05.140 of the Ordinance.
Pursuant to Calimesa Municipal Code Section 9.05.120, either party may, and prior to
commencing any action in a court of competent jurisdiction shall, appeal any final decision or
order of the board to the City Council by filing written notice of the appeal with the City Manager
not later than 15 days after the date of deposit in the mail of the decision of the Board to the
petitioner and affected residents. Appeals shall be filed, processed and heard in accordance
with Section 9.05.120 and the administrative rules implementing the Ordinance.
On June 15, 2016, the City received an “Appeal of the Calimesa Mobile Home Rent Stabilization
Board Decision to the City Council” from Petitioner AVMGH Three-Golden Palms Limited
Partnership. AVMGH contends that the Board’s decision must be reversed, and that it is entitled
to a Fair Return Rent Increase of $100.80 per space per month, and a Temporary Rent
Increase of $17.50 per month for five years to reimburse AVMGH for its costs incurred in
preparing and presenting the Special Rent Increase Petition to the Board and City Council.
Under the Ordinance, the public hearing on the Appeal must commence at a regular meeting of
the Calimesa City Council held within 30 days after the Appeal is filed. AVMGH’s Appeal has
been scheduled to be held on Tuesday, July 5, 2016 at 6:00 p.m. in the Norton Younglove
Multipurpose Center, 908 Park Avenue Calimesa, California.
Any person may submit written comments prior to the public hearing or may appear in person
before the City Council to be heard. As noted, no new evidence may be submitted to the City
Council on the Appeal. As of the date of the completion of the agenda packet, there were no
written comments submitted to the City Clerk for consideration.
Page 41 of 194
Appeal of the decision of the Mobile Home Rent Stabilization Board
As adopted by MHRSB Resolution No. 2016-01
City Council Meeting of July 5, 2016
Page 6
DISCUSSION:
A. OVERVIEW OF CALIMESA MOBILE HOME RENT STABILIZATION PROGRAM
The City’s Mobile Home Rent Stabilization Ordinance (“Ordinance”) is contained in Chapter 9.05
of the Municipal Code (“CMC”). To assist in administering the implementing the Ordinance, the
City Council previously adopted implementing rules, which are contained in the Administrative
Rules for the Implementation of the Mobile Home Rent Stabilization Ordinance (last amended
by Resolution No. 2011-38) (“Rules”). In accordance with the Ordinance and Rules, the City has
also adopted fee resolutions governing requirements for fees and deposits for Special Rent
Increase Petitions. (Ordinance, Section 9.05.110(A) and 9.05.120(C); Rules 7.2, 8.2, 9.2 and
9.4; and Resolution No. 96-28) Copies of the Ordinance, the Rules, and Resolution No. 96-28
are enclosed with this staff report. (Attachments 2, 3 and 4) The following is a general
overview of the Ordinance and its implementing rules.
1. To Whom Does the Ordinance Apply?
The Ordinance applies to all month-to-month spaces in a mobile home park in the City. Certain
types of spaces are exempt from the Ordinance, including spaces subject to long-term leases in
excess of 12 months' duration, pursuant to the California Mobilehome Residency Law. (Cal.
Civil Code § 798.17) However, upon expiration of an exempt long-term lease, rent control will
thereafter control the rent on the subject space. The last rent in effect under the lease or rental
agreement becomes the base rent for purposes of the City’s Ordinance. (Cal. Civil Code
§ 798.17(a).) Under the Mobilehome Residency Law, spaces or parks constructed after January
1, 1990, which constitute “new construction”, are also exempt from the Ordinance. (Cal. Civil
Code §§ 798.7 and 798.45)
2. What does the Ordinance do?
The Ordinance limits both the method by which rents may be increased in a park, and the
amount of such increases. Upon adoption of the Ordinance, park owners were required to
register their parks, and provide a description of space status, and space rent records. Park
owners must also submit annual registration forms, which contain changes in space status and
rents. If rent increases are imposed, park owners must also file updated schedules of space
rents in their parks.
3. What types of rent increases does the Ordinance allow?
The Ordinance limits rent increases to Permitted Annual Rent Increase (Section 9.05.080);
Capital Improvement Rent Increase (Section 9.05.090); and Rent Increase to Provide a
Reasonable Return (Section 9.05.100).
4. What is a Permitted Annual Rent Increase?
Under Section 9.05.0808 of the Ordinance, a park owner may increase rents not more than
once every 12 months by 80% of the increase in the Consumer Price Index (“CPI”) over the
prior 12 months. Permitted annual increases are permitted by right, and no prior approval from
the City is required. However, concurrently with service of 90-day notice of rent increase to the
affected residents, park management must file a rent schedule with the City Manager which
Page 42 of 194
Appeal of the decision of the Mobile Home Rent Stabilization Board
As adopted by MHRSB Resolution No. 2016-01
City Council Meeting of July 5, 2016
Page 7
contains a list of all spaces subject to the Permitted Annual Increase, the space rent in effect for
each subject space as of the date of notice of the rent increase, the amount of the rent Increase
and the method by which it was determined, and the proposed new space rent.2 Dissatisfied
residents may file a protest with the City Manager, who then reviews management’s actions to
make sure the increase complies with the 80% CPI limit and other provisions of the Ordinance.
The City Manager’s decision is final.
5. What types of rent increases require Board approval?
Other types of rent increases require submittal of a petition, a noticed public hearing before the
Board, and issuance of a written decision from the Board. These types of rent increases include
the following:

A Rent Increase to Provide a Reasonable Return (or “Special Rent Increase”),
pursuant to Section 9.05.100 of the Ordinance.

Capital Improvement Rent Increase, pursuant to Section 9.05.090.

A Temporary Rent Increase, pursuant to Section 9.05.140, to reimburse the park
owner for costs incurred for professional services in preparing a Special Rent
Increase Petition and participating in a Board hearing or appeal hearing (only if
the Board grants approval of a Special Rent Increase).
The Ordinance and Rules specify the requirements for a petition under each of these provisions,
including the supporting documentation that must be submitted; and also provide that the
petition be considered by the Board at a noticed public hearing. The affected Park residents
have the right to provide a written opposition or response, and all interested persons have the
right to appear and testify at a public hearing. The Board must issue a written decision. The
Board’s decision is subject to appeal to the City Council. (Ordinance, Sections 9.05.100,
9.05.110, 9.05.120, 9.05.140; Rules, Chapters 7, 8, 9, 10, and 11.)
Following approval of any rent increase under the City’s Ordinance, the park management must
provide a 90-day notice of rent increase to the affected residents. (Cal. Civil Code § 798.30)
6. What is a Capital Improvement Rent Increase?
A Capital Improvement Rent Increase is a temporary rent increase based on the cost of a
completed capital improvement paid over an amortization period. Once the amortization period
ends, park management must stop charging for the Capital Improvement Rent Increase. The
Capital Improvement Rent Increase must be separately listed on each monthly rental statement,
and cannot be included in the space’s base rent for purposes of subsequent Permitted Annual
Rent Increases or Rent Increases to Provide a Reasonable Return.
The Ordinance defines a “capital improvement” to mean “the installation of new improvements
and facilities and/or the replacement or reconstruction of existing improvements and facilities
which consist of more than ordinary maintenance or repairs, and have a useful life of at least
five years. Capital improvements include, but are not limited to, improvements which would
2
Under state law, park management must provide a resident with 90-days notice of rent increase. (Cal.
Civil Code § 798.30).
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qualify as capital improvements, rather than ordinary repairs and maintenance, pursuant to
applicable regulations of the Internal Revenue Service or California State Franchise Tax Board.”
(Ordinance, Section 9.05.030) Examples of capital improvements and an amortization schedule
for particular capital improvements and capital expenses are also listed in the Rules. (Rules,
Chapter 9 and 10 and Appendix A)
In order to petition for approval of a Capital Improvement Rent Increase, the park owner must
first obtain approval from at least 51% of the occupied spaces in the park, unless the capital
improvement is necessary to protect the public health and safety of the park, its residents, or
neighbors. (Ordinance, Section 9.05.090(A) and (C))
7. What is a Rent Increase to Provide a Reasonable Return?
In addition to Permitted Annual Increases, the Ordinance also allows park owners to petition the
Board in extraordinary situations where the park owner contends that the Permitted Annual
Increase does not provide a reasonable return. (Ordinance, Section 9.05.100)
There is no precise definition of a fair return. Court decisions have established that a “fair
return” is a legal constitutional term:
“It refers to a constitutional minimum within a broad zone of reasonableness. . .
[W]ithin this broad zone, the rate regulator is balancing the interests of investors, i.e.,
landlords, with the interests of consumers, i.e., mobilehome owners, in order to achieve
a rent level that will on the one hand maintain the affordability of the mobilehome park
and on the other hand allow the landlord to continue to operate successfully.”
Galland v. City of Clovis (2001) 24 Cal.4th 1003, 1026 (emphasis added); Carson Harbor
Village v. City of Carson Mobilehome Park Rental Review Board (1990) 70 Cal.App.4th 281,
288-289.
Other court decisions have described a fair return in the following manner: “A fair return is a
return which is high enough to encourage good management, reward efficiency and discourage
the flight of capital and is commensurate with returns on comparable investments, but not so
high as to defeat the purpose of preventing excessive rents.” Kavanau v. Santa Monica Rent
Control Board (1997) 16 Cal.4th 761, 771-772; San Marcos Mobilehome Park Owners Ass’n. v.
City of San Marcos (1987) 192 Cal.App.3d 1492, 1502; Oceanside Mobilehome Park Owners’
Ass’n. v. City of Oceanside (1984) 157 Cal.App.3d 887, 907. A court must determine whether
the regulations may be reasonably expected to maintain financial integrity, attract necessary
capital, and fairly compensate investors for the risks they have assumed, and yet provide
appropriate protection for the heart of relevant public interest, both existing and foreseeable.
Stardust Mobile Estates v. City of San Buenaventura (2007) 147 Cal.App.4th 1170, 1188;
Galland, supra, 24 Cal.4th at 1021-1022; Kavanau; 16 Cal.4th at 771-772.
This process maintains the constitutionality of a rent control ordinance by preventing
confiscatory results. See Birkenfeld v. City of Berkeley (1976) 17 Cal.3d 129, 165. Determining
prices that will provide a fair return “involves a balancing of the investor and the consumer
interests.” Galland v. City of Clovis (2001) 24 Cal.4th 1003, 1021; Kavanau, supra, 16 Cal.4th at
771-772. As the Supreme Court has emphasized in Kavanau, “a ‘court must determine whether
the [regulation] may reasonably be expected to maintain financial integrity, attract necessary
capital, and fairly compensate investors for the risks they have assumed, and yet provide
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appropriate protection for the heart of relevant public interests, both existing and foreseeable.’ “
(16 Cal.4th at 771-772.) “[R]ent regulation must not prevent an efficient enterprise from “ ‘
“operating successfully,“ ' ” but rent regulators are permitted to adjust prices “within a 'broad
zone of reasonableness,' ” balancing the interests of landlords and tenants. (Kavanau at 778779.)
Consistent with these constitutional principles, the Ordinance provides for additional types of
increases, which are referred to as “Special Rent Increases”, and classifies them into three
categories:

A Maintenance of Net Operating Income (“MNOI”) Rent Increase. (Ordinance,
Section 9.05.100(D).)

An MNOI Rent Increase based on Readjusted Base Year Net Operating Income.
(Ordinance, Section 9.05.100(E).)

A Fair Return Rent Increase. (Ordinance, Section 9.05.100(F).)
The park owner bears the burden of establishing entitlement to a Special Rent Increase.
(Ordinance, Section 9.05.100; Rule 7.3 and 7.5.)
8. What is a Maintenance of Net Operating Income (MNOI) Rent Increase and how
is it determined?
The procedures and requirements for approval of a Maintenance of Net Operating Income
(“MNOI”) Rent Increase are contained in Sections 9.05.100 and 9.05.110 of the Ordinance, and
in Rule 7.3 and Rules, Chapter 8. Under these provisions, the park owner may petition the
Board for a rent increase that will provide a current net operating income (“NOI”) that is equal to
the net operating income from a specified “base year” as adjusted by 80% of the increase in the
Consumer Price Index (or “CPI”) since the base year to the date of the petition. (Ordinance,
Section 9.05.100(D).) The Ordinance generally defines the initial base year as fiscal year July 1,
1991 through June 30, 1992.
A park’s net operating income (“NOI”) equals the park’s gross income (“GI”) minus the park’s
operating expenses (“OE”) for the relevant year. (Ordinance, Section 9.05.100(B)(10).) The
Ordinance contains a rebuttable presumption that the base year NOI provided a park owner with
a fair return. (Ordinance, Section 9.05.100(A), (D) and (F).)
The purpose of an MNOI Rent Increase is to enable the park owner’s income to increase by a
percentage of the increase in inflation in order for the park owner to have sufficient income to
cover the increased cost of operating a park plus while allowing the park owner to continue to
earn a profit. The Ordinance limits the application of inflation to 80% of the increase in the CPI,
and identifies the categories of income and operating expenses that may be considered in
determining the park’s NOI for the base year or current year. (Ordinance, Section 9.05.100(D),
Rule 7.3.)
In reviewing the MNOI petition, and the evidence submitted in support of the requested rent
increase, the Board must determine the Park’s base year gross income, operating expenses
and NOI; the increase in CPI between the base year and the current year; and the Park’s
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current year gross income, operating expenses and NOI.
follows:
Relevant terms are defined as

“Base Year” or “BY”: Fiscal Year 7/1/91 – 6/30/92

“Current Year” or “CY”: The 12 months immediately preceding the date of
submittal of a complete petition

“Consumer Price Index” or “CPI”: Consumer Price Index for All Urban
Consumers for the Bureau of Labor Statistics for the Los Angeles-RiversideOrange County areas (Dept. of Labor Bureau of Labor Statistics)

“Base Year CPI”: CPI for 6/30/92 (146.2)

“Current CPI”: CPI last reported as of the date the petition is deemed complete

“MNOI Rent Increase”: Maintenance of Net Operating Income Rent Increase
authorized by CMC Section 9.05.100(D)

“Gross Income” or “GI”: The park’s gross space rents and other income allowed
under the Ordinance and Rules

“Net Operating Income” or “NOI”: Gross income – Operating Expenses

“Operating Expenses” or “OE”: Park’s operating costs allowed under the
Ordinance and Rules

“Park Current Year Net Operating Income Entitlement” or “Park CY NOI
Entitlement”: The amount representing the park’s Net Operating Income for the
Base Year as adjusted by 80% of the increase in the CPI from the base year to
the current year
The Maintenance of Net Operating Income formula in Section 9.05.100(D) allows the net
operating income in the base year (1991/92) to increase by 80% of the increase in the CPI since
the base year. If the park owner’s NOI for the entire park has not increased by that amount, the
Board will grant a rent increase sufficient to bring the current NOI for the park up to the amount
equivalent to the 80% CPI increase (or “Current Year NOI Entitlement”). The total dollar amount
of the Current Year NOI Entitlement is determined for the park as a whole; that sum is then
compared with the current net operating income; and the difference is divided up among all
spaces (regulated and unregulated) to arrive at a monthly space rent increase (or “Maintenance
of Net Operating Income rent increase”) that is added to each space’s current space rent. The
resulting amount constitutes the new monthly rent for each space.
In order to be entitled to an MNOI Rent increase, the park’s current year NOI must be less than
the current year NOI Entitlement, which is determined by adjusted the base year NOI by 80% of
the increase in inflation since the base year. Conceptually, the MNOI methodology is
demonstrated in the following samples:
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SAMPLE #1 – NO MAINTENANCE OF NET OPERATING
INCOME (MNOI) RENT INCREASE WARRANTED
Current Year NOI
greater than Park
Current Year NOI
Entitlement –
Current Year NOI
Park
Current
Year NOI
Entitlement
Base Year NOI
adjusted by
80% CPI
Increase
No MNOI Rent
Increase warranted
Base Year NOI
SAMPLE #2 – MAINTENANCE OF NET OPERATING
INCOME (MNOI) RENT INCREASE WARRANTED
Park MNOI Rent
Increase
Base Year NOI
adjusted by
80% CPI
Increase
Park
Current
Year NOI
Entitlement
Current Year NOI
Current Year NOI
less than Park
Current Year NOI
Entitlement –
MNOI Rent Increase
warranted
Base Year NOI
In order to obtain approval of an MNOI Rent Increase, the park owner bears the burden of
proving entitlement to the proposed MNOI Rent Increase. (Rule 8.6(E).) The park owner must
establish, by substantial evidence, that he/she is entitled to an MNOI Rent Increase, including
the park’s base year and current year gross income, operating expenses and net operating
income. Under the Rules, decisions of the Board “shall be supported by substantial evidence in
light of the entire record of the proceedings.” (Rule 8.3(E).) Evidence is substantial when “it is
relevant, credible and reliable and provides enough information, together with the reasonable
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inferences from that information, to support a conclusion even though other conclusions might
also be reached. No decision may be supported solely by hearsay evidence.” (Rule8.3(E).)
9. What is an MNOI Rent Increase based on Readjusted Base Year Net Operating
Income and How is it Determined?
A park owner may rebut the presumption that the base year net operating income provided a
just and reasonable return, and instead use an adjusted base year net operating income in the
MNOI formula. (Ordinance, Section 9.05.100(E).) When an ordinance provides for use of the
MNOI rent increase methodology, including a specified base year, the courts have ruled that the
ordinance must also allow a park owner to show the base year net operating income was not
just and reasonable. This type of rent increase is known as a “Vega adjustment” after the
appellate court decision of Vega v. City of West Hollywood (1990) 223 Cal.App.3d 1342. In
Vega, the appellate court indicated that a rent control formula that establishes a base rent is
premised on the concept that the base date rents can reasonably be expected to reflect general
market conditions (see Vega, supra, 223 Cal.App.3d at 1351), and when a rent control law
establishes a “base rent” by reference to rents on a specified date, the law should permit
adjustments of that base rent for those rental units that had artificially low rents at that time, and
that the law should permit individualized rent adjustments in appropriate cases even if base rent
was not artificially low. See Kavanau, supra, 199716 Cal.4th 761, 772 (citing Birkenfeld v. City
of Berkeley (1976) 17 Cal.3d 129, 168 and Fisher v. City of Berkeley (1984) 37 Cal.3d 644,
689–690.)
In the City’s Ordinance, a park owner may demonstrate that in calculating MNOI Rent Increase
formula, the base year net operating income must be adjusted upwards based evidence relating
to factors such as unusually high or low operating expenses in the base year; capital
improvements were made in the base year but not reflected in rent increases collected in that
year; unusual repairs due to uninsured events or vandalism; base year rents in the park that
were lower than rents charged in comparable parks in the base year; and base year rents that
were not sufficient to provide a just and reasonable return in the base year, by presenting
evidence of the return on investment earned in comparable parks. (Ordinance, Section
9.05.100(E); Rule 7.4.)
Under Section 9.05.100(E), the park owner also bears the burden of proof of demonstrating, by
substantial evidence, that he/she is entitled to an MNOI Rent Adjustment based on a
Readjusted Base Year NOI. The park owner must provide enough information and
documentation to establish: the income and expenses received in the base year and current
Year; and the factual basis for the request to readjust (increase) the base year NOI using the
factors listed in Rule 7.4.
10. What is a Fair Return Rent Increase and How is it Determined?
Under Section 9.05.100(F) of the Ordinance, a park owner may rebut the presumption that the
rent increase calculations provided in Section 9.05.100(D) are sufficient to provide a just and
reasonable return by presenting evidence that the rate of return being earned by the
mobilehome park is not just and reasonable. (See also Rules 7.3, 7.4 and 7.5.) The purpose of
this provision is to provide park owners with the opportunity to demonstrate that even with the
other rent increase mechanisms in the Ordinance, the park owner is still not earning a just and
reasonable return, consistent with court decisions.
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Rule 7.5(B) provides as follows:
“B.
In determining whether a park owner is entitled to a Special Rent Increase under
CMC 9.05.100(F) and this Rule 7.5, the Board shall consider all relevant evidence,
including but not limited to:
1. The purchase price of the park;
2. The NOI of the park at the time of purchase;
3. Any capital improvements made in the park by the owner;
4. The park’s current income and expenses and income and expenses for the
past 5 years;
5. The return earned by the park;
6. The return earned by comparable residential rental enterprises with
commensurate risks and benefits;
7. The rents earned by comparable mobile home parks measured by the
“capitalization rate” (or “cap rate”) of those parks determined by dividing a
park’s net operating income by its purchase price; and
8. The mobile home park’s pattern of income and expenses over each of the
past five years, including any unavoidable increases or decreases in
maintenance, repairs, and other operating expenses (including but expressly
not limited to deferred maintenance or substantial deterioration in the mobile
home park other than as a result of normal wear and tear).”
In evaluating a Fair Return Rent Increase Petition, the Board (and City Council on appeal) must
consider the evidence presented by the park owner and the other parties on these listed issues
and other relevant factors to determine if the park owner has established that it is entitled to a
Fair Return Rent Increase.
11. What is a Temporary Rent Increase and Under What Circumstances May It Be
Awarded?
Section 9.05.140 of the Ordinance authorizes the Board to award a park owner a Temporary
Rent Increase to reimburse the park owner for costs incurred for professional services in
preparing a Special Rent Increase Petition or Capital Improvement Rent Increase Petition and
participating in a Board hearing or appeal hearing. A Temporary Rent Increase may only be
awarded by the Board if a park owner obtains approval of a Special Rent Increase or Capital
Improvement Rent Increase from the City.
The concept of a Temporary Rent Increase is based on a California Supreme Court case,
Galland v. City of Clovis (2001) 24 Cal.4th 1003, which held that a city should allow a park
owner to apply for recovery of the costs incurred in obtaining a discretionary rent increase under
a local rent control ordinance.
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The Ordinance provides that a Temporary Rent Increase is determined based on eligible costs
for professional services actually incurred by the park owner, such as an attorney and fair return
experts, incurred by a park owner in preparing the Special Rent Increase Petition and appearing
before the Board and City Council on any appeal. If the park owner intends to seek recovery of
a Temporary Rent Increase, the park owner must include a Petition for a Temporary Rent
Increase as part of the Special Rent Increase Petition. Consideration of the Temporary Rent
Increase is part of the public hearing before the Board. (Ordinance, Section 9.05.140(A) and
(B).)
If granted, a Temporary Rent Increase must be amortized over a five-year period, and may
include seven percent interest. The rent increase must be listed separately on the rental
statement; cannot be incorporated into the base rent for the space; and the park owner must
cease charging the increase once the amortization period has ended. A resident must be given
the option to pay the full amount so as to avoid any payment of interest. The decision on the
Temporary Rent Increase must be addressed in the Board’s decision granting or denying the
Special Rent Increase Petition. (Ordinance, Section 9.05.140(C).)
B. RECOMMENDATIONS
Based on the foregoing Report, Staff recommends that the City Council allow the Park Owner
and Park Resident Representatives, and any other interested person, to address the City
Council on the general issues pertaining to AGMGH’s Appeal from Board Resolution No. 201601. Staff recommends that the City Council then continue this appeal to a date and time certain,
to allow all interested parties to present their arguments for and against the Appeal, and for the
City Council to then carry out its discussion and deliberations and reach a decision on the
Appeal.
ATTACHMENTS:
Attachment 1: Calimesa Mobile Home Rent Stabilization Board Resolution No. 2016-01
Attachment 2: Calimesa Municipal Code, Chapter 9.05, Sections 9.05.010 – 9.05.190 (codified
format)
Attachment 3: Administrative Rules for the Implementation of the Calimesa Mobile Home Rent
Stabilization Ordinance
Attachment 4: City Council Resolution No. 96-28
Attachment 5: Board Record of Proceedings (separately provided to Council members),
including:
Petitioner (Park Owner) Exhibits A through N
Petitioner (Park Owner) Attachments 1, 2 and 3
Staff (City) Exhibits 1 through 46
Staff (City) Attachments 1 through 9
Park Resident Representative Exhibits I through VI
Park Resident Representative Attachments 1 and 2
Transcript of Board Hearing (seven transcripts and disks)
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