2011 Study of Economics of Mobilehomes - HCIDLA

Transcription

The Economics of Mobilehome Ownership and Mobilehome Park Ownership
in the City of Los Angeles
and a Comparison of Local Regulations of Mobilehome Park Space Rents
Kenneth K. Baar, Ph.D.
May 2011
This report was commissioned by the City of Los Angeles. The opinions and conclusions herein are those
of the author and do not necessarily represent the views of the City.
Table of Contents
I. Executive Summary
ii..The Author
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I. Introduction
vi
1
U. The Supply of Mobilehome Park Spaces and Rent Levels
A. The Current Supply
B. The Construction of Mobllehome Park Spaces: From Boom in the
1960's and 1970's to Frozen Supply by 1980
Co Mobllehome Park Space Rent Levels and Utility Costs Paid
by Mobilehorne Owners Current Space Rents and Utility Costs
D. Increases in Rents
5
7
III. The Special Nature of the Parkowner-Mobilehome
Owner Relationship
8
IV. Mobilehomes, Mobilehome Owners, and the Economics of Mobtlehome
Ownership
A. Characteristics of Mobilehomes
B. Mobilehome Costs and Trends in Mobilehorne Values
C. Length of Occupancy-Rate of Turnover in Ownership
D. The Characteristics of the Residents of Mobilehome Parks
12
13
22
22
V. The Economics of Mobtlehome Park Ownership
A. Mobllehome Park Operating Costs
B. Historical Investments and Trends in Park Values
24
27
VI. Comparison of Los Angeles Mobilehome Space Rent Stabilization Ordinance.
with Other Local Ordinances
A. Overview
B. Annual Rent Increase Standards
C. Allowances for Cost Pass-throughs of Specific Cost Increases
D. "Just and Reasonable" (Fair Return).............................
E. Allowable Rent Increases Upon In-Place Sales of Mobilehomes
F . Exemptions from Local Rent Regulations...............................................................
32
32
35
36
38
40
VII. Comments on Submissions of Coalition of Park Owners
41
VIII. The Impacts of the Vacancy Control
42
2
3
Appendices:
A. List of Mobilehome Parks in the City of Los Angeles
B. Park Survey Form
Co Summary of Rent Increase Standards in Local Rent Stabilization Ordinances - "'"
D. Author's Resume
A-I
B-1
C-l
D-l
Executive Summary
The City of Los Angeles has 57 mobilehome parks with a total of 6,526 mobilehome spaces.
Under the City's Rent Stabilization Ordinance (RSO), owners of residential rental property are
permitted annual rent increases equal to the percentage increase in the Consumer Price Index (CPI),
with a floor of3% and a ceiling of 8% on these automatic increases. In addition, mobilehome park
owners are permitted to increase space rents by 10% when a mobilehome is sold in-place to a new
mobilehome owner. This provision governs virtually all changes in tenancies in mobilehome parks,
because rnobilehomes are sold in-place to incoming tenants, rather than being moved upon a change
in tenancies. The 10% ceiling under the mobilehome space rent regulation is in contrast to the
regulations of apartment rents which permit unlimited rent increases upon a change in tenancy.
This study was requested in the context of the City Council's consideration of the 2009
Economic Study of the RSOJ and proposals by a coalition of mobilehome park owners to modify the
10% ceiling on rent increases upon in-place sales of mobile homes. Subsequently, the coalition
proposed rent increases allowances upon in-place sales ranging from 50% to 100% depending on the
length of occupancy of the departing mobilehome owner.
The purposes of this study are to provide information on the economics of mobilehorne
ownership and mobilehome park ownership in the City of Los Angeles, to provide a comparison
between the mobilehome park space rent provisions ofthe Los Angeles RSO and the mobilehome
park space rent stabilization ordinances of other cities, and to provide a perspective on the impacts
of the ordinance provision that limits increases in rents upon in-place sales.
Mobilehome Owners' Rental and Ownership Costs
Currently, the average monthly rent of mobilehome park spaces in the City of Los Angeles is
about $615.2 Rent levels among parks vary substantially above and below the average. In addition
to space rents, a majority of mobilehome home park tenants reimburse park owners or directly pay
for sewer, water, and/or trash collection expenses, each of which average in the range of$15 to $19.
Space rents and utility costs are apart from the costs associated with purchasing and maintaining
the "mobile"homes which as a practical matter are immobile manufactured housing structures. Most
of the mobilehomes (about 80%) are doublewide, comparable in size to a modest two bedroom
bungalow home. A majority of the mobilehomes in parks were manufactured before 1980. About
I Economic Study of the Rent Stabilization Ordinance (RSO) and the Los Angeles Housing Market (2009, Los
Angeles Housing Department, report prepared by Economic Roundtable, Los Angeles).
2 Source: Rents reported by mobilehome
parks responding
to City survey, spring 2011.
20% were manufactured within the last 20 years. The original costs of the mobilehomes
manufactured in the 1960's and 1970's were in the range of $15,000 to $20,000. The pre-1980
homes increased in value substantially during the 1980's to an average of$49, 767, but then declined
in value in the 1990's. In the middle of the last decade, their average values climbed to about
$70,000; since then they have gone down in value about 20%. The vacancy rate in the parks is 1.6%.
About half of the mobilehome owners purchased their homes during the last decade. The
purchase prices of pre-1980's homes were mostly in the range of$30,000 to $70,000. The prices of
newer mobilehomes in parks were typically in the range of$1 00,000. In the course of owning their
mobilehomes, owners typically invest in making necessary replacements and upgrades to their units.
Mobilehome Park Space Rent Regulations in California
Under state law, apartment rent ordinances must permit unlimited rent increases upon vacancies;
however, this provision is not applicable to local regulations of the rents ofmobilehome park spaces.
The rationale for the limit on rent increases upon a turnover in mobilehome park space tenancy is
that mobilehome owners are captive tenants in the sense that they have large investments in
structures that are, as a practical matter, immovable. If there is no limit on allowable increases in
park space rents, then rents may be raised to a level which causes the mobilehome owner to lose part
or all of the value of the mobilehome, which is commonly the primary asset of low income
mobilehome owners.
The special situation of mobilehome owners has been recognized in state legislation that provides
specific protections for mobilehome owners apart from the protections that are available to apartment
tenants, including the right to sell mobilehomes in place. In addition, this special situation has been
recognized by the adoption of approximately ninety local ordinances in California which regulate
mobilehome park space rents, but do not regulate apartment rents. (Nine jursidictions in California
regulate apartment rents.)
In a recent federal Ninth Circuit Court of Appeal opinion, upholding Goleta's mobilehome park
space rent rent regulation, the majority opinion commented:
Because the owner of the mobile home cannot readily move it to get a lower rent,
the owner of the land has the owner of the mobile home over a barrel."
On May 16, the U.s. Supreme Court will announce whether or not it will review this decision."
11
3 Guggenheim v. Goleta, No. 06"56306, p. 20423 (Dec. 2010).
(www.ca9.uscoufts.gov/datastore/opinions/201
O/12122/06-56306.pdf).The
dissenting
measure we deal with here is a wealth transfer, pure and simple." (Id. at 20441)
opinion commented:
"The
4 Petition for hearing ("certiorari") before the U.S. Supreme Court currently pending. The Supreme Court grants a
small percentage of the petitions that are made.
The limits under the RSO on mobilehome park space rent increases upon in-place sales are in
keeping with the ninety local ordinances throughout the state,' most of which which limit annual
increases to either the full the CPI increase or a fraction of the CPI increase and either do not permit
any additional rent increases upon in-place sales or limit additional increases upon in-place sales to
amounts usually in the range of 5% to 10%.
Allowable Annual Increases
under Local Mobilehome Park Space Rent Stabilization Ordinances
Allowable Annual Rent Increase
as Percent of CPI lncrease'"
No. of Ordinances
None
7
50%
.2
60%·74%
9
75%·90%
3.2
100%*
35
100%
Los Angeles
* Standards with 100% of CPI up to a cap of 5% or more are considered full
CPI increase standards since the CPI has increased by more than 5% in only
two years since 1983 (when the increases were 5.1% and 5.9%).
**Two standards with an annual minmum of 5% or more are counted as 100%
of CPI standards; actually they usually permit increases of more than 100% of
CPI.
Allowable Rent Adjustments Upon In-Place Sales of Mobilehomes
under Local Mobilehome Park Space
Rent Stabilization Ordinances
No. of Ordinances
No increase Upon In-Place Sale
limited
Increase Permitted
43
30
(including
los Angeles)
12
No limit on Increases
(Vacancy Decontrol)
iii
5 There may be one hundred ordinances or a few more. This author was able to locate ninety ordinances. Eighty-five ordinances
were reviewed for the purposes of the analysis in this report
Mobllehome Park Rents, Operating Costs, and Values
The operating costs of mobile home parks usually are in the range of30% - 40% ofrental income,
a level comparable to the ratio for apartments." Mobilehome park operating costs include more
infrastructure expenditures than apartments, but do not necessitate the maintenance of the actual
structures that the mobilehome owners occupy,
Rent levels have increased from an average of $248 in 1984 to a current average of about $615.
This increase in space rents, from 1984 to the present of about 148% compares with the increase in
the Los Angeles area all-items Cl'I of 118% and the increase in the area rent index of 161 % during
this period, In order to place the growth in mobilehome park income in perspective it must be noted
that it has occurred within a special framework; unlike apartment owners, mobilehome park owners
have not faced any vacancy risk once their parks become fully occupied, due to the immobility of
mobilehomes.
Original costs of developing the parks in the 1960's and the first half of the 1970's, when most
parks were developed, were in the range of $3,000 to $6,000 per mobilehome space, In 1984, park
values were in the range of $20,000 per space, Current values are in the range of $40,000 to
$100,000 space, with an average in the range of $70,000 to $80,000, The increase in values is
attributable to the increases in net operating income and the sharp decline in capitalization rates since
2000 (from about 9% to about 6%). A large portion of the increases in value may be attributed to the
decline in the capitalization rate, which is an outcome of the sharp decline in the cost of capital
(mortage interest rates) and steep decline in the rates of return provided by alternate investments (e.g,
bonds and bank deposits.)?
Discussion of Amendments to the Vacancy Increase Provision
The current rent increase provisions have been adequate to provide park owners with a fair
return, defined as a net operating income increasing by the same rate as the CPt
Authorization of 50% to 100% increases upon in-place sales of mobilehomes, especially for
parks with above average rents, would constitute an allowance to charge more than the maximum
that would be possible in the absence of any regulation. Such increases in mobilehome park space
rents would far outstrip increases in apartment rents. While, in theory, apartment owners may be
permitted unlimited rent increases upon vacancies, they could not obtain tenants willing to pay a rent
iv
6 However, in mobilehome parks water, sewer, and refuse costs are much more likely to be passed through to the
residents, See discussion on pp. 25-27,
7 For discussion
of this phenomena
see p, 29,
which is 50% to 100% higher than the rent of the departing tenant. In contrast, if a mobilehome park
owner demands a high space rent, potential tenants can offset the higher rent with a lower offer for
the attached mobilehome.
While 50% to 100% increases in space rents would be exceptional, rationale for some
modification of the current standard for rent adjustments on in-place sales are noted here. It may
be appropriate to take into account the length of occupancy of the prior tenant in a for standard
setting the allowable rent increase upon an in-place sale. For example, the ordinance could provide
for an allowable increase of x% upon an in-place sale with an additional y% for each year that the
prior tenancy exceeded a certain number of years.
v
The Author
The author's articles on rent regulation issues have been cited frequently by California Courts of
Appeal and the California State Supreme Court and in the decisions of five other state supreme
courts.
The author has a Ph.D in urban planning and is an attorney. He has researched and published
extensively on housing policy issues. Over the past 30 years, he has served as a consultant to twenty
California jurisdictions on issues related to mobilehome park policies. Apart from his consulting on
rent regulation issues, he has served as a consultant for the World Bank and U.S. A.LD. on public
policy issues outside of the U. s.
The author's resume is attached as Appendix D ofthis report.
The author gratefully acknowledges the assistance of Jay Tharp for assistance in the preparation
of this report.
vi
I. Introduction
Currently, there are 57 mobilehome parks in the City of Los Angeles with 6,526 mobilehome
rental spaces (excluding resident owned parks). Virtually all of those spaces are occupied by
mobilehome owners who purchased their homes, but rent the underlying park spaces. Sixteen parks
with 150 or more spaces contain over half of the spaces. About eighty percent of the spaces are
occupied by doublewide mobilehomes, which are comparable in size to smaller two bedroom houses.
About eighty percent of the mobilehome spaces are in parks with pools and clubhouses.
This study was requested
in the context of the City Council's consideration of the 2009
Economic Study of the RS08 and subsequent proposals by parkowners to modify the provisions in
the rent regulations governing allowable rent increases when mobilehomes are sold in place. Under,
the current provisions, the rent "may be increased by am amount not to exceed the rent on any
existing comparable site in the park, or ten percent, whichever is lower.?"
The purposes of this study are to provide information on the economics of mobilehome
ownership and mobilehome park ownership in the City of Los Angeles, to provide a comparison
between the provisions ofthe Los Angeles RSO and the rent stabilization ordinances of other cities,
and to discuss the ordinance provision that limits increases upon in-place sales. In the course of
attempting to provide information that will be useful, this study is certain to also raise questions that
would require further study.
In conjunction with the City's request for this report, the Los Angeles Housing Department
conducted a mail survey of park owners requesting information about park size, number of spaces,
number of singlewide and doublewide mobilehomes, vacant spaces, rent levels, utilities provided
by the park owner, and exempt leases. Responses were obtained from parks containing 60% of the
spaces in the City."
8 Economic Study of the Rent Stabilization Ordinance (RSO) and the Los Angeles Housing Market (2009, Los
Angeles Housing Department, report prepared by Economic Roundtable, Los Angeles).
9 Municipal
Code Sec. 151.06.F.
10 The statistical
was destroyed by
per space for this
would have been
2.
analysis in this report does not include one very large park which has 600 spaces (Oakridge) which
fire in 2008 and still has an abnormal vacancy rate of 56% (315/600 spaces). Also, the land area
park is exceptionally large, 1/3 acre. If the data from this park had been included the average rent
higher and the city-wide vacancy rate in mobilehome parks would have been higher.
1
In this report, current data is compared with data obtained from a detailed study of mobile home
parks and the characteristics of their residents, which was commissioned by the Rent Stabilization
division in 1984. II
Il, The Supply of Mebilehome Park Spaces and Rent Levels
A. The Current Supply
In California, there are 4,754 mobilehome parks with 365,418 mobilehome spaces.
Mobilehome Parks and Park Spaces
Statewide, Metropolitan Area, County and City
Mobileilome
Parks
Area
California
Los Angeles Metro Area
(LA, Orange, Riverside,
and San Bernardino
Counties)
los Angeles County
Los Angeles Ciiy
Source: See footnote
Mobilehome
Park Spaces
4,754
365,418
1,861
158,695
589
47,907
57
6,526
1
Within the City about 80% of the mobilehome parks are concentrated in Council Districts 6,
7, 12, and 15th.
Mobilel'iome Park Spaces in ccuncll Districts 6, 7,12, & 15
(82% of the Mobilehome Park Spaces Within the City)
Area
Mobilehome
Parks
Mobilehome
Park Spaces
Council District 6
10
850
Council District 7
16
2368
COl.!ncil District 12
10
1389
COl.!neil District 15
8
944
11 "Mobile Home Parks Under Rent Stabilization", Rental Housing Study (1984, Rent Stabilization
(hereinafter referred to as "1984 Mob ilehorne Study").
2
Division)
Appendix A contains a list of the mobilehome parks in the City with their addresses and the
number of spaces in each park
B. The Construction of Mobilehome Park Spaces: From Boom in the 1960's and 1970's to
Frozen Supply by 1980
Most of the mobilehome park construction in California took place in the 1960's and 1970's.
From 1960 to 1975, the number of mobilehome park spaces in California increased from abut
150,000 to about 370,000. In the past three decades, few parks have been constructed. Since 1990
the overall supply of mobile home park spaces in California has changed only slightly, with few new
additions and some park closures.
Statewide Inventory
Moi:.lilehome Parks and Spaces
1961 to 201012
Year
1961
1965
1970
1975
1980
1984
No. of Parks
3,961
4,212
4,828
6,401
5,850
5,812
(RV spaces excluded
1990
1996
2005
2011
No. of Spaces
148,662
178,652
229,649
369,626
414,981
432,066
from totals after 1984)
5,817
5,698
4,868
4,754
377,149
372,647
368,150
365,148
During the 1960's and 1970's, land was relatively cheap and mobilehome parks could be
developed as the most profitable use. Typically, this development took place in the less developed
portions of metropolitan areas (such as Riverside and San Bernardino counties and northern San
Diego County) or outside of metropolitan areas.
12 Sources: 1961,1965,1970,1975
and 1984 data - California Department of Housing and Community
Development, "Mobilehome Parks in California", p.4 (Table 1) (February 1986). 1990 data: HCD, statistical report,
Aug. 8,1990.1996,2005,
and 2011 data: Computer Printouts provided by HCD, Division of Codes and Standards,
Mob ilehorne Parks Program.
3
As house and condominium prices and rents increased substantially in the later 1970's,
mobilehome park development ceased to be as profitable as other types of potential development in
metropolitan areas.
Also, as the outer portions of urban areas became more developed, neighborhood resistance to
mobilehome park construction became widespread. Most local jurisdictions require use permits for
projects of a significant size, such as mobilehome parks. Review standards for use permits are
usually subjective, directing a local commission to consider environmental, economic, and social
concerns without setting forth specific standards. In effect, the use permit requirements give local
commissions virtual carte blanche to reject any proposal.
Furthermore, it became more difficult to locate vacant plots of land that were large enough to
develop mobilehome parks. Minimum acreage requirements of ten to twenty acres for mobilehome
parks became common and standard density restrictions (e.g. eight mobilehomes per acre) required
much lower densities for mobilehome parks than condominium and apartment projects.
In 1986, the State Department of Rousing and Community Development described the panopoly
of land use tools that were commonly used to exclude parks:
As for mobllenome parks, the surveys indicate that localities have many ways to
discourage park development without violating the law: set allowable densities
too low (six/acre or less); set minimum acreage too high; require developerprovided sewerage to otherwise feasible sites; require conditional use permits or
PUD-type ameniiies.13
In 1990, a regional director of the Western Mobilehome Association, an organization of
California mobilehome park owners, commented on the difficulties for mobilehome park
development posed by land use regulations and a shrinking supply of land:
The question Is always asked, "With rising land values in Southern California, is
mobltehome park development still an option?" The answer is "yes" .
... The process IS definitely more difficult, since the amount of available land is
shrinking ...
Most m obllehorne parks in Southern California were developed during the late
1950's through the early 19705 ....
They faced relatively few government
reg ulatlons.
Since the early 19705, however, the number of mcbtlehome
parks being
developed has decreased drastically.
Only a handful of parks have been
developed in the m ore populous reg ions of California in the last 15 years. Most of
these have been confronted with increased government regulations, extended
completion times and high development costs-a distinct difference since the
building of earlier parks.
• n
13 California
Department
of Housing and Community
Development
Parks, p. 21 (June 1986).
4
(RCD), Incentives
for Family Mobilehome
As you can imagine, finding
cumbersome and costly,14
10 to 20 acres of vacant land in to day's market is
In Los Angeles, the trends in park construction have mirrored the trends in California, No
mobilehome parks have been constructed within the City since the 1980's, The City's 1984 Study
noted that no land in the City was zoned for mobilehome parks and that they were only permitted
under use permits.
A variety of factors inhibit establishment of new parks. Currently the City of los
Angeles has no land zoned for new mobtlenome park use. New mobile home parks
would only be permitted under use permits obtainable after individual scrutiny by
the City of the site and the potential placing of a variety of development and usage
conditions
on the granting of the use permit. Representatives
of park owner
associations say that zoning. government requirements that add to cost, the high
cost of land, high interest rates, and limited profitability because of rent control are
factors inn !biting additional park development 15
In Los Angeles County, the supply of mobilehome park spaces has declined by about ten percent
since 1986, from 53,496 to 47,907,16
While the lack of new mobilehome park construction since the 1980's has been attributed to rent
controls, since 1992, state law has exempted newly created mobi1ehome park spaces from local rent
regulations. 17
C. Mobilehome Park Space Rent Levels and Utility Costs Paid by Mobilehome Owners
1. Space Rents
The 35 mobilehome parks which responded to the City survey contain approximately sixty
percent of the mobilehome spaces in the City. The average space rent in those parks was about
$615,18 It should be noted that there were large variations among the parks in average space rents
and often among the rents within parks. Overall, average monthly space occupancy costs are in the
range of$650 when taking into account water, sewer, and refuse collection costs. These costs do not
include the costs of purchasing and maintaining mobilehomes,
14 Brooks, "Mobilehome Park Development:
Vo1.l6,No.6,p.19
(June 1990).
I 5 1984 Mobilehorne
16 Source:
Study, p, 57
See footnote
17 California
Can It Still Happen in Southern California?",
1,
Civil Code Sec. 798.45 (1992)
18 See note 8, supra,
5
WMA Reporter,
Four parks had average monthly space rents within the range of $350 to $450.19 Those lower
rents tended to be in parks with more singlewide rnobilehomes and fewer amenities. A few parks had
average monthly space rents of $800 per month or higher.
2. Share of Utility Costs Paid by Mobilehome Owners
a. Gas and Electricity
As in apartments, park tenants generally pay for their gas and electricity costs. In virtually all
mobilehome parks, gas and electricity systems are submetered (as opposed to separately metered).
Under submetering systems, park owners pay the gas and electricity supplier and charge the
mobilehome owners at a rate which is regulated by the Public Utilities Commission. The allowable
rates that can be charged to the mobilehome owners include an allowance for a differential above
the amount that the park owner pays to utility company, for the purpose of providing park owners
with the funds to maintain the gas and electricity infrastructure within the park.
The survey results indicated that gas expenses are passed through to mobilehome owners for 84%
of the spaces and electricity expenses are passed through in 96% of the spaces. Estimated average
gas expenses for each space are $31 month and average electricity expenses are $21 month. (See
p. 26 for a discussion of the basis for this estimate.)
b. Other Utilities - Water, Sewer, and Refuse Collection
The responses to the park owner survey indicated that about two-thirds of the mobilehome
owners pay for sewer and refuse costs and about forty percent pay for water costs. Typically, the park
owner pays the utility supplier and obtains reimbursement from the residents. (See page 26, for the
basis for the estimates of the costs for the provision of each of these utilities, which are set forth
below.)
1. Water
Water costs average about $18 per mobilehome space per month.In the responding parks these
costs are passed through to 39% of the mobilehome owners.
2. Sewer
Sewer costs average about $15 per mobilehome space per month. In the responding parks these
costs are passed through to 62% of the mobilehome owners.
19 Two parks with a total of 23 spaces had average space rents of approximately
6
$200.
3. Refuse Collection
Refuse collection costs average about $14 per mobilehome space per month. In the responding
parks these costs are passed through to 76% of the mobilehome owners.
utility Expenses Paid by Park Residents
Expense Paid by Residents
Pet, of Park Spaces
Among Parks
Responding to Survey
Estimated
Avg. Monthly
Cost
(based an
regional data)
Gas
88%
$31.27
Electricity
96%
$21.09
Sewer
62%
$15.37
Refuse
76%
$14.74
Water
39%
$18.77
Utility
D. Increases in Space Rents
In the City's 1984 study, the average space rent was $248. Since then the average space rent has
increased by 148% (from $248 to $615). In comparison, the allowable annual rent increases under
the ordinance have totaled 139%.
The total of the allowable annual Cl'I increases under the ordinance since 1984 have exceeded
the Cl'I increase because in eight different years the three percent floor for allowable annual
increases in the RSO exceeded the Cl'I increase.
The 148% increase in space rents, from 1984 to the present compares with the increase in the
all-items Cl'I of 118%.and the increase in the Los Angeles rent index of 161% during this period."
20 U.S. Bureau of Labor Statistics, CPI-all urban consumers (Los Angeles-Riverside-Orange County) - All items index - annual
average, 1984 = 103.6,2010 = 225.9 (Series CUURA421SAO); Rent of primary residence - 1984 = 106.9, 2010 = 279.8 (Series
CUURA421SEHA). The increase in Los Angeles area rents was exceptional compared to the national average. The U.S. rent
index increased by 137% during this period. 1984 = 105.3,2010 = 249.4
7
HI. The Special Nature of the Mobilehome Park Space Rentals
At the expense of reciting information that is commonly but far from universally known, some
explanation of the nature of the parkowner-mobilehome owner relationship is essential to provide
a perspective on the information provided in this report.
As a practical reality, mobilehomes that are placed in mobilehome parks are actually
"immobilehomes." They are prefabricated houses, that generally are comparable in size to small
houses. The majority of homes are "doublewide" structures that consist of two 10 or 12 foot wide
sections. Typically, mobilehomes are improved with supporting foundations, carports, and porches.
After mobilehomes are placed in mobilehome parks they are rarely moved, unless they are
"discarded" for a nominal value because they are replaced by a new mobilehome. When mobilehome
park residents move they sell their mobilehomes in place.
Special characteristics of mobilehome park tenancies in urban areas generally include the
following:
Special Characteristics
1. The "historical"
mobtlehcrnes
parkcwners.
of Mobilehome
Park Tenancies
investments of the mobllehome owner (tenants) in
in mobllehorne parks generally exceed those of the landlord
2. The physical relocation
of mcbtlenomes
is costly.
3. Relocation within metropolitan areas is practically impossible
are virtually no vacant spaces in mobllehorne parks."
because there
4. Parkowners generally will not permit older m obllehomes to be moved into their
parks when they do have vacant spaces to offer to rent.
5. The supply of mebttehome park spaces in urban areas in California is either
frozen or declining. MObilehome park construction in urbanized areas of
California virtually ceased by the early 1980's as a result of changing
economics of land use development and land use policies that have curbed
the construction of new mobllehome parks.
As a practical matter, the benefits of investments in rnobilehomes can only be realized by
continuing occupancy in the mobilehome or an "in-place" sale ofthe mobilehome. They cannot be
preserved by moving the mobilehome to another park.
21 Exceptions
to this pattern occur when there are exceptional
8
rent increases.
In 2001, the California Supreme Court explained:
BACKGROUNO;THE
RELATIONSHIP
MOBllEHOME
OWNER/MOBilEHOME
PARK OWNER
This case concerns the application of a mobllahome rent control ordinance, and
some background on the unique situation of the mobnenorne owner in his or her
relatlonsh ip to the mobllehom e park owner may be useful. "The term 'm obile home'
is somewhat misleading. Mobile homes are largely immobile as a practical matter,
because the cost of moving one is often a significant fraction of the value of the
mobile home itself. They are generally placed permanently in parks; once in place,
on Iy about 1 in every 100 mobile homes is ever m oved. [C ltation om ltted.] A mobile
home owner typically rents a plot of land, called a 'pad,' from the owner of a mobile
home park. The park owner provides private roads within the park, common
facilities such as washing machines or a swimming pool, and often utilities. The
mobile home owner often invests in site-specific improvements such as a driveway,
steps, walkways, porches, or landscaping.
When the mobile home owner wishes
to move, the mobile home is usually sold in place, and the purchaser continues to
rent the pad on which the mobile home is located." (Yee v. Escondido (1992) 503
U.S. 519, 523, 112 S.Ct. 1522, 118 L.Ed.2d 153.) Thus, unlike the usual tenant, the
moblleherne owner generally makes a substantial investment in the home and its
appurtenances-vtyplcally
a greater investment
in his or her space than the
mobllehcme park owner.
[Cite omlttedl The immobility of the mobilehome, the
investment of the mcblleheme owner, and restriction on rnobllehome spaces, has
sometimes led to what has been perceived as an economic imbalance of power in
favor of mobtlehome park owners. 22
Other courts have noted the captive nature of mobile home park tenancies. For example, the
Florida Supreme Court commented:
Where a rent increase by a park owner is a unilateral act, imposed across the
board on all tenants and im posed after the initial rental ag reernent has been entered
into, park residents have little choice but to accept the increase. They must accept
it or, in many cases, sell their homes or undertake the considerable expense and
burden of uprooting and moving. The "absence of meaningful choice" for these
residents, who find the rent increased after their m obile homes have becom e affixed
to the land, serves to meet the class action
requirement
of procedural
unconscionability.23
In 1994, a federal district in California stated:
Mobila homes, despite their name, are not really mobile. Once placed in a park, few
are moved. This is principally due to the cost of moving a coach which is often
equal to or greater than the value of the coach itself. Also, many mobile home parks
will not accept older coaches so that after a time, the coach may be rendered
effectively lm mobile ... the park owner, absent regulation, theoretically has the power
22 Galland v. Clovis, 24 Ca1.4th. 1003, 1009-1010
23 Lanea Homeowners,
U.S. 964 (1989)
(200])
Inc. v. Lantana Cascade of Palm Beach, Ltd., 541 So. 2d 1121, 1124 (Fla.), celt. denied, 493
9
to exact a premium from the tenant who, as a practical matter, cannot move the
ccach."
Likewise, real estate industry appraisal guides have noted the captive or monoplistic nature of
the landlord-tenant relationship in the context of mobilehome park space rentals. As early as 1966,
an "Appraisal Guide for Mobilehome Parks" published by the Finance Division of the Mobile Homes
Manufacturers Association described how land use restrictions provide park owners with
"monopolistic" value. The guide states:
Monopolistic Value
Generally, the cost approach of a proposed park represents the upper limit of value, This is
not always true, for this approach frequently cannot include the monopolistic value of a
limited or restricted area use. Nor is It true in the case of older parks in areas which no longer
permit the construction of parks and which frequently have this monopolistic value. Under
these circumstances, when competition is strictly curtailed, the value of thls interest, plus the
value ofim provements, and the normal value of the land, may exceed the accepted application
of the cost approach .... the land with this legal use should be credited with the premium value
of the monopoly interest.25
In 1988, a nationally prominent real estate newsletter explained that:
With today's parks having virtually no vacancies and tenants with limited options you get a
base cash flow that is as predictable as the first of the month.26
The following passage authored by an expert in the mobilehome park industry, which touts
mobilehome park investments as having low risks, is typical in contemporary real estate industry
literature discussing this type of investment.
Reasons for success The primary reason that land-lease communities perform so
well is their ability to prod uce positive operating leverage by increasing rents faster
than expenses go up. Manufactured home communities have historically been able
to do this because of the higher barriers that discourage competitors from entering
the market. Difficulties in :zoning, as well as the extensive time required to fill up
communities are powerful disincentives to competitive development. This not only
prevents most markets from being overbuilt, but it in fact insulates them from
competition. This state of affairs will probably not last forever. But in the meantime,
24 Adamson Companies v. City of Malibu, 854 F.Supp. 1476,1481 (1994, U.S.D.C. Central Dist. Cal.), Also see
Baar, "The Right to Sell the 'Im'mobile Manufactured Home in Its Rent Controlled Space in the'Im'mobile Home
Park: Valid Regulation or Unconstitutional
Taking?", Urban Lawyer Vol. 24, 107·171 (Winter 1992, American Bar
Ass'n)
25 Randall, Appraisal
Guide for Mobilehome
26 "Mobile Home Parks: A Profitable
Gorham, and Lamont).
Parks, (1966, Mohilehorne
Niche for Partnerships,"
10
Manufacturers
Association),
11 Real Estate Outlook (No.3)
p. 31.
(1988, Warren,
investment in manufactured
home communities
can provide
compared to other types of real estate investment.27
superior
returns
Relocation Impact Reports prepared in conjunction with park closures in the Los Angeles area
note a virtual absence of spaces where existing mobilehomes can be moved. (Under state law,
relocation impact reports must be prepared before mobilehome parks can be closed.) A survey
conducted in conjunction with a park closing in 2009 in in an unincorporated area of Los Angeles
(in Sylmar) found that less than one percent of all park spaces were vacant in 52 parks with 6962
spaces within a 20 mile area."
A relocation impactreport associated with the closing of a mobilehome park in Thousand Oaks
in 2009 noted the unavailability of spaces where mobilehomes can be moved within the four county
area. It states that:
There are very few, if any, parks in Ventura, Santa Barbara, Los Angeles, Orange,
and San Diego Counties thai will accept used homes onto theirspaces. The housing
market in these counties has produced a condition where spaces are a at a
premium, and older homes must. be purchased with the intent of removing them
from the space in order to accomodate the installation of a new home. In this
circumstance, the parks will not accept new homes.29
V. Mobilehomes,
the Economics of Mobilehome Ownership, and Mobilehome Owners
The data in this section on the size ofmobilehomes and trends in mobilehome prices is mainly
based on information in mobilehome sales reports to the California Department of Housing and
Community Development (HCD)
All transfers of mobile homes within mobilehome parks and their sale prices must be reported
to HCD ..The sales reports contain the original sale price of the mobilehome, its current sale price,
its manufacture date, and whether it is singlewide, doublewide, or triple wide. Several private firms
compile this data and provide reports to appraisers on comparable sales, that are used for apprasing
purposes ..This author obtained sales information for 3,500 mobilehome sales from 1980 to the
present, which was compiled by one of the vendors.
The data provides a very large sample, which provides for a wealth of valuable statistical
information. At the same time, it is not a record of all of the sales from 1980 to the present. Before
27 George Allen, Why Mobile Home Communities Are Superior Investments (www.mobilebomeparkstore.comfarticies/article4.htm), accessed May 9, 2011)
28 Sky Terrace Mobilehcme
Park Closure Impact Report (Overland,
Pacific, & Cutler, Long Beach, CA (2009))
29 Mohilehome Park Closure Impact Report, for Conejo Mobile Home Park, Newbury Park, California (Star
Management, Santa Ana) (The park is within the City limits of Thousand Oaks and the report is on the City's web
page.)
11
1997, the provision ofHCD data was less systematic and 1997 is much smaller. Also, the data is
limited by an unknown rate of sales which are not reported to HCD. In recent investigations in
Northern California, HeD has found that the rate of non-reporting is substantial among some parks.
The data provides a large sample to project trends in sales prices from the 1980's to the present.
However, in regards to turnover in mobilehome ownership, it cannot be used as a measure for the
periods before 1997, since it contains only a portion of the sales prior to 1997.
A. Characteristics
of Mobilehomes
1. Size
In this year's survey, the park owners reported that about 80% of the mobilehomes are
doublewides. This compares with the results of the 1984 survey of mobilehome owners in which
about two-thirds of the respondents indicated that they lived in doublewide mobilehomes."
2. Age
The majority of the rnobilehomes in parks were installed when the park was opened and have
been purchased in-place by subsequent occupants.
Among the 3,012 mobilehomes for which purchase data was obtained for the period from 2000
to the present, half were manufactured before 1980; 18.8% were manufactured in the 1980's, 8%
were manufactured in the 1990's; 22% of the mobilehomes were manufactured during the last
decade. Certainly among the mobilehomes that were not sold in the past decade the proportion of
pre-1980 mobilehomes would have been higher since none of those mobilehomes would have been
manufactured in the last decade, as opposed to 22% of the mobilehomes which were sold.
Year Mid.
Manufacture Year of Mobilehomes
S0 Id From 2000 tn rougl h 2010
Doublewlde
All
Singlewide
Triplewide
(n=3012)
(n=518)
(n=2215)
(n"279)
1960·69
19.7%
50.8%
14.9%
0.0%
1970-79
31.2.%
28.8%
32.1%
23.7%
1980·89
18.8%
14.3%
16.5%
45.5%
1990-99
8.0%
2.5%
9.0%
10.8%
2000-03
7.1%
1.9%
9.0%
1.4%
2004·07
9.3%
1.5%
12.0%
2.9%
6.0%
15.8%
5.9%
0.2%
2008·10
Source: AnalYSIS under the supervision of author usmg data from
mobltehome sales reports to California Dept. of Housing & Community Dev,
301984 Mobilehorne Study, p. 7.
12
Draft Report, April 29, 2011
B. Mobilehome Costs and Trends in Mobilehome Values
Mobilehomes Manufactured
before 1980
The average original prices ofthe doublewide mobilehomes that were manufactured before 1980
was in the range of $15,000. By the 1980's, their average value had increased to approximately
$47,000. (In the City's 1984 survey of mobile home owners, the average reported original purchase
price was $21,979 and the estimated current value was $38,693.31) During the 1990's, mobilehome
values declined to an average of about $31,000, consistent with overall trends in the housing market.
Then, their average values increased to $73,182 for the period 2004 to 2006, and then declined to
an average of$55,641 in 2010. The values of the last decade are comparable to the average off-site
cost of new mobilehomes.
Overall, the increase in mobilehome values between the 1980's and the present, of about 50%,
has been very modest, when compared with overall real estate trends. When examining trends in the
values of mobilehomes, it should be understood that the the investments by mobilehome owners also
include remodeling and upgrading costs as well as reported purchase prices. Therefore, a comparison
of the average sales prices in the 1980's and the present may overestimate appreciation, because it
does not take into account additional investments not included in the original purchase price. In
contrast, to the increase in average mobilehome values of about 50% from the 1980's to the present,
mobilehome parks increased in value by an estimated 250% (from an average value of about $20,000
per space in 1984 to a current average of about $70,000), apartment values increased by over 200%
between 1983 and 2007 (from an average value of$38,500 in 1983 to an average of$121,000 in
2007.
Mobilehomes Manufactured before 1980
Average Purc hase P'nee
sin~lewide
Year of purchase
[n)
doublewide
Average
Purchase Price
(insufficent
1980·1989
sam pie)
(n)
Average
Purchase Price
58
$46,650
1990·1999
116
$11,248
236
$30,917
2000-2003
176
$16,074
350
$44,177
2004·2006
123
$31,275
338
$73,182
2007·2010
158
$28,277
365
$66,289
2010
92
$24,384
92
.
,
$55,641
Source: AnalYSIS under the supervrsron of author using data from
moblleheme sales reports to California Dept of Housing & Community [lev.
31 Supra n.9
13
Mobilehomes Manufactured
between 1980 and 1989
The values of mobilehomes manufactured between 1980 and 1989 have increased by about 60%
since the 1980's.
Mobilehomes
Manufactured
1980-1989
Average Purchase Price
smqlewlde
doublawlda
Average
Purchase Price
(n)
Average
Purchase Price
1980·1989
24
$58,946
1990-1999
83
$38,317
Year of purchase
(n)
2000·2003
27
$23,302
133
$59,156
2004-2006
24
$25,458
134
$103,892
2007-2010
23
$27,096
99
$92,815
.Source: Analysis under the supervision
of author using data from
mobllehome sales reports to California Dept. of Housing &. Community Dev.
During the past decade, the price of mobilehornes installed in mobilehorne parks which were
manufactured since 2000 has increased from about $81,825 to $139,447.
Mobilehomes
Manufactured
2000-2010
Average Purchase Price
dnublawlde"
>1<
Year of purchase
(n)
Average Purchase
Price
2000-2003
113
$81,825
2004·2006
207
$111,832
2007·2010
277
$139,447
2010
79
$127,582
Only a few singlewides were manufactured after 2000.
Source: Analysis under the supervision
mobllehome sales reports to California Dept of Housing &.
Community Dev.
14
A full recount of the debate over the causes of appreciation in mobilehome values is beyond the
scope of this report. However, in light of the continual debate over whether the appreciation is
simply an outcome of rent regulation or other factors, some comment is in order."
Experts who have testified on behalf of park owners. have contended that mobilehome prices
normally depreciate in value in the absence of rent regulation and that the value mobilehomes
manufactured before 1980 would be in the range ofNADA (bluebook) values in the absence of rent
regulation. (E.g. about $15,000 to $20,000 on the average). However, the average sales prices of
mobilehomes in mobilehome parks in cities in California major metropolitan areas without rent
stabilization ordinances have been well in excess ofNADA (bluebook) values."
The appreciation in mobilehome values may be attributed to a number of factors. Increases in
the cost of housing alternatives (home purchase or renting) push up the price that households are
willing to pay for other alternatives. The trends in the values of mobilehomes manufactured before
1980 and between 1980 and 1989 (See charts on previous page). paralleled trends in the balance of
the housing market. Values of homes, apartments, and mobilehomes declined in the 1990's, sharply
increased after 2000, and then leveled off or declined in the past few years from peak levels of20042006 in the past few years.
Also, increases in the cost of newly manufactured mobilehomes push up the value of existing
mobilehomes. According to one economic model, a mobilehome depreciates in value by virtue of
becoming older. However, the value of a product is partly hinged on what it would cost to legally
replace it. In the case of a mobilehome constructed before 1980, it may have only a nominal value
if it is not sitting on a mobilehome park space, because virtually no parks in urban areas would
accept it. On the other hand, if it is sitting in a mobilehome space, it provides an alternative to the
cost of purchasing a new mobilehome, While pre-1980 mobilehomes may not meet the current code
requirements for new mobilehornes, they still provide a valuable and safe alternative to having to
construct a new dwelling. The dwelling can have a value approaching the cost of a new replacement
simply by virtue of the fact that it has already secured a location where vacant mobilehome park
spaces are a rare commodity.
Trends in the Costs of Mobilehome Ownership for New Entrants
The average purchase prices of mobile homes in Los Angeles (including homes manufactured in
the past two decades as well as older homes) have doubled between the 1980's and the past seven
years, from an average of$49, 767 in the 1980's to an average of about $90,000 during the past seven
32 For a view that is contrary to the view set forth in this section see Quigley, "The Curious Institution
Home Rent Control", Journal of Housing Economics, Vol. 16, No.2, 189-208 (June 2007).
of Mobile
33 See reports of James Brabant, an appraiser who has prepared numerous reports for California cities in mobilehome park space
rent stabilization cases. Jan 14, 2010 letter - re: Carson Harbor Village Mobilehome Park, Application for Rent Increase FY
2006/2007 and June 21,2004 letter re: Rental Adjustment Application, San Juan Mobile Estates, San Juan Capistrano.
15
years. This increase, however, is not a measure of increases in value of existing mobilehomes
because it reflects a combination of increases in the value of pre-existing mobilehomes and the
higher prices of new mobilehomes, During the same period, as noted, the other component in the
costs of mobilehome ownership, space rents, have increased from an average of $284 to about $615,
from 1984 to the present.
Trends in Average Purchase Price
of Mobilehomes
Year of purchase
(n)
Average Purchase
Price
1980·1989
107
$49,767
1990·1999
581
$33,569
2000·2003
961
$51,335
2004·2006
1009
$88,728
2007·2010
.2010
1108
$92,059
295
$82,256
Source: Analysis under the supervision
mobllehorne sales reports to California Dept. of Housing &. Community Dev.
Investments of Mobilehome Owners who Purchased Their Homes During the Past Decade
The previous subsections discuss trends in the costs and values of mobilehomes manufactured
during different time periods. This section presents data on the purchase prices of mobilehomes
purchased during the past decade, according to their characteristics in terms of size and age.
The following charts show the purchase prices paid by mobilehome owners who have purchased
their mobilehomes since 2000, with a breakdown according to the size and age ofthe mobi1ehome.
Three-quarters of the purchases during the past decade were of doublewide mobilehomes,
16
Purchase Prices 2000-2010
Singlewide Mobilehom,es
25 ..0%
20 ..0%
15.0%
-
-
1------1
10 ..0%
-
-
1--'
I--
5.0%
-
-I
f---
f---
0.0%
-r-0
0
ill
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Sl
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1./1.
0
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(total in sample: 563)
Source: Analysis under the supervision of author using data from
mobilehome sales reports to California Dept. of Housing & Community Dev.
17
Doublewide .Mobilehomes
20.0%
15.0%
10.0%
5.0%
0.0%
-
• • I.
s
.. ~ m m6
0
en
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mobilehome sales reports to California Dept. of HOUSing & Community Dev.
18
The following two tables contain data on purchase prices since 2000 of mobilehomes
manufactured before 1980, approximately half of the purchases during this period.
Singlewide Mobilehomes
Manufactured
before 1980
30.0%
.25.0%
20.0%
-
r--
r--
-
10.0%
r--
r--
-
-
5.0%
r--
r--
-
-
15.0%
0.0%
0
0
0
LI"I'
...
<.t>
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Source: AnalYSis under the supervision of author using data from
19
About two-thirds ofthe pre-1980 mobilehomes that were purchased during the past decade were
doublewides. Their average purchase price was $61,152.
of D,oubl,ewide Mobilehomes
Manufactured
before 1980
20.0%
150%
10.0%
5.0%
0.0%
0
0
0
0\
0\
u;'
al
VI-
....
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V)-
VI-
Among the mobilehomes that were purchased since 2000, 18.8% were manufactured between
1980 and 1989. Only 73 of those homes were singlewides. The doublewides had widely ranging
purchase prices. About half of mobile home purchase prices were in the range of $30,000 to
$70,000.28% cost more than $100,000. The average price was $84,639.
20
Purchase Prices 2000-2.010
Doublewide Mobilehomes
Manufactured 1980-1989
20.0%
15.0%
10.0%
5.0%
0.0%
•
0
0
0
en
en
en
0
u-l
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21
Only 8% of the mobilehomes were manufactured between in the 1990's. 22% were manufactured
since 2000. Most of these sales involved original purchases of new mobilehomes, rather than resales.
The average cost of the newly manufactured
$118,809.
mobilehomes
(maufactured
since 2000) was
Purchase Prices 2000-20 0
Doublewide Mobilehomes
'Manufactured after 1999
20.0%
15.0%
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C. Length of Occupancy - Rate of Turnover in Ownership
There is no systematic data on the length of the tenancies of mobile home owners. However, the
HCD sales data on sales since the year 2000 contains sales reports for about 3,000 mobilehomes out
of6,526 spaces in the City; thereby indicating that approximately half of the mobilehome spaces in
the City were purchased since 2000.34
34 The survey of park owners included questions about the number of mobile homes in the park that had been
purchased in recent years. However, a substantial portion of the respondents did not have this information and some
estimates seemed too low (e.g. only one sale, within a year, out of 100 spaces).
22
D. The Characteristics
of the Residents of Mobllehome Parks
The 1984 City study included a survey of 200 mobilehome park residents. Most of the
respondents -77% - were 62 or older and half were from very low or low income households. The
average household income ofthe mobilehome owners was about 80% ofthe average for all renters. 35
Numerous surveys have been conducted of mobile home owners in other jurisdictions, since the
19801s. Many of these studies were performed in conjunction with muncipal consideration of
whether or not rent regulations should be adopted. These studies have consistently shown that on the
average mobilehome owners have very low incomes compared to the general population and that
they are low compared to apartment dwellers.
Two recent surveys document the characteristcs of park tenants in Carson and Palmdale.
A 2005 survey of Carson mobilehome park residents which yielded 655 responses to household
income questions revealed that 49% of the households were in the "very low" income category."
Another 29% were in the "low" income category."
A 2008 survey of Palmdale mobilehome park residents which obtained 227 responses yielded
the following results for household income: under $15,000 - 37%; $15,000 - $19,999 -18%; $20,000
- $39,999 - 32%; $40,000 + _ 13%.38
35 1984 City Study, p, 7 ($19,937 average household income for mobilehome owners compared with an average of
$23,364 for renters
The census reports provide data on residents of mobile homes. However, that data doses not distinguish between
mobilehomes in parks and mobilehornes outside of parks. According to the 2000 census there were 8,222
mobilehome residences in the City, compared to 6,496 mobile home spaces in mobilehome parks. Therefore, the
data set for all households living in mobilehomes cannot be used as a measure of the characteristics of mobile home
park residents.
36 $22,950 or less - for one person households,
$26,250 or less - for two person households.
37 $22,950 - $36,701 for one person households,
$26,250 - $41,901 for two person households.
38 Baar & Pojani, Mobilehome
City of Plamdale)
Park Tenancies
in Palmdale,
23
p.l 0 (November
2008, report commissioned
by the
V. The Economics of Mobilehome Park Ownership
A. Mobilehome Park Operating Costs
There is no systematic source of data on average operating costs of mobilehome parks in
California. However, a combination of industry commentaries, estimates of park owner experts, data
from sales reports, data from appraisal reports, all support the conclusion that mobilehome park
operating costs are generally in the range 0[30% to-40% of space rental income. (However, a portion
of these costs - water, sewer, and refuse - are much more likely to be passed through to residents than
in apartments.)
The following estimates are based on data from mobilehome parks outside of the City of Los'
Angeles. However, this author is not aware of any reasons why the costs of operating mobilehome
parks in Los Angeles would differ substantially from industry averages in the state. In addition, some
national data is presented, which is based on larger more systematic samples.
National Data
For a number of years a leading source of mobile home park financial data in the U.S .., (George
Allen, author ofthe Allen Reports") has published reports onpark operating costs nationwide based
on samples of data voluntarily submitted by park owners.
In his operating cost study in 2002, Allen found that the median operating expense ratio for
responding mobilehome parks, which had a median rent of $283 was 8.1%.40 In 2007, the Allen
letter reported that the average operating cost ratio was 41.1 %.41
A recent report by a company that holds about 42,000 mobilehome park spaces in the Eastern
portions of the U.S .., indicates that operating costs in 2008 and 2009 were about one-third to forty
percent of income." The average monthly space rent of its spaces was about $400. Apart from
operating expenses, annual costs for major replacements were $162 per space per year."
39 George Allen, CPM, GFA Management
Inc., Indianapolis,
Indiana
40 Allen Survey VI (1982)
41 18th Annual Allen Report (January-February
42 Sun Communities,
30,2009).
Inc. Supplemental
2007).
Operating
and Financial
43 Id., at p. 9.
24
Data, pp. 4 &6. (For the Quarter Ended September
Operating Cost Estimates Based on Survey by Expert in Mobilehome Appraisals
One California appraiser, who has specialized in mobilehome park appraisals for many years
and has frequently appeared on behalf of park owners, as an expert, in rent stabilization hearings,
John P. Neet, has prepared projections of mobile home park operating expense ratios based on data
from 60 mobilehome parks in his appraisal files. His sample consisted of parks in the western
United States, which were predominantly in California. (The results of his analysis were submitted
in February 2011, in a rent increase hearing in the City of Calistoga.")
Total operating costs excluding utilities averaged $148.75/space/month.45
According to Neet's data professional management expenses averaged $28.58/ month. The
average amount for on-site management was a little lower, $26.87. Repairs and maintenance
averaged $42.11!space per month.
Average Operating Expenses (Excluding Utilities)
Derived from Neet Analysis
Expense
Category
No. of parks ill
Neet's sample
reporting this
expense
Month Space*
Taxes
49
$25.58
Prof. Mgmt.
23
$28.83
On-Site Mgmt.
43
$26.87
Administrative/Miscellaneous
51
$16.64
Insurance
RepairsiMaintenance
49
52
$8.72
$42.11
5
$5.01
Security
Total
>I<
Expense/
$148.75
The actual amounts set forth in the analysis by Neet are annual amounts which are
converted to monthly amounts in this table.
44 Rancho de Calistoga Rent Increase Application (Calistoga, CA). Report submitted on Feb. I, 20 J 1. (N eet notes
that: "The reader should be aware that there are no reliable institutional data sources that report statistics on
operating expenses for this property type such as exist for other, more commonly held investment properties, ... ) Id.
at p. 43, fn. 12.
45 Neet presented
annual figures; in this report the annual figures are divided by twelve months.
25
Neet notes that professional management expenses usually average 3 to 6% of rents and states that
typically, the ratio is lower than 6% for larger parks.
In Neet's study, average water, sewer, and trash expenses totalled approximately $49. However,
as noted, the parks responding to the City's survey reported that in a substantial portion of parks one
or more ofthese types of costs are passed through to the residents.
Average Water, Sewer, and Trash Expenses
Derived from Neet Analysis
no. of parks in Neet's
sample
Expense/Monthl
Space*
reporting this type of
expense
>I<
Water
37
$18.77
Sewer
17
$15.37
Trash
34
$14.74
Neet's annual amounts are converted to monthly amounts
Gas and electricity costs, in Neet's sample, averaged about $50/space/month. However, in most
of the parks in Los Angeles these costs are recovered through submetered distribution.
Average Gas and Electricity Expenses
Projections in Neet Analysis
Electricity
no. of parks
Expense/
reporting this type
Month / Space*'
of expense
35
31.27
27
21.09
Natural Gas
>I<
Neet's annual amounts are converted to monthly amounts
Comparable Sales Reports and Industry Projections
Comparable mobilehome park sales reports prepared by a leading vendor of sales information,
(Costar Camps) which are based on reports by brokers, typically project a 35% operating expense
ratio for mobilehome parks in the absence of actual data.
26
Real estate industry reports consistently note that the operating expenses of mobilehome parks
are lower than for apartments and that there is far less risk and a much lower rate of vacancy losses.
The following analysis which was published by National Association of Real Estate Trusts
(NAREIT) in 1999, set forth the positive attributes of mobilehome park investments, including low
turnover, low operating expenses, and barriers to entry of competitors .
...Second, low turnover and low levels of rent default provide cash flow atablllty.
Manufactured home community operators benefit from an annual tenant turnover
rate under 10 percent and an average tenant dellnqulncy rate of 1 percent to :2
percent, su bstantlally below the com parable rates for investment grade apartments .
... Third manufactured
home communities
have extremely low break-even
occupancy compared to other real estate classes, which limits investor risks while
enhancing investment returns. With the exception of self-storage properties, ... the
35 percent average break even occupancy rate of manufactured home com m unities
is lower than any other REIT real estate class .
.... Fourth, manufactured home communities require minimal capital expenditures,
which reduces risk on the property revenue stream and makes cash flows more
predictable. Again, with the exception of self-storage facllitles , manufactured home
communities require lower non-revenue generating capital expenditure expense
than any other form of investment grade real estate. On average, non-revenue
capital expenditure compromises
(sic) 1 percent to 3 percent of annual rental
revenues, which equates to about $120 to $220 per site per year, compared to 5
percent to 8 percent for apartments ...
Fifth, high barriers to entry limit new supply. Both financial and regulatory
forces continue to create substantial barriers to an influx of new manufactured
home community developments."
B. Historical Investments and Trends in Park Values
1. Original Investments in Developing Parks
In the 1960's and 19701s, in outer sections of urban areas, mobilehome park development was
often among the most profitable uses of the land. Land was cheap. The County's 1970 Housing
Element projected average land costs in the range of$7,000 for single family dwellings. Parks could
be developed at a density of eight mobilehome spaces per acre.
Reports and surveys indicate that average park development costs were about $6,000 per space
in the 19701s and that monhtly space rents were in the range 0[$80 to 100. (In current dollar terms,
46 NAREIT,
Jay Leupp)
Investor Outreach,
Dec. 10, 1999 (National
Ass'n of Real Estate Investment
27
Trusts, summary of speech
the costs were in the range of $30,000 to 36,000 per space and rents were in the range of $480 to
600.)
The Small Business Reporter of the Bank of America estimated that development costs of
mobilehome parks averaged about $2,625 per space in 1970 and ranged from $3,500 to $6,500 per
space in 1976.47 These amounts do not include the costs of holding a Park after its has been
constructed but before it has filled up.
A 1974 report by the Western Mobilehome Association projected that the total cost of onsite
improvements average $2,600 to $4,000 per lot, exclusive of land. "This includes installation of all
underground utilities, utility services, sewers and sewer connections, landscaping, paving of parking
areas and streets, and construction of services, swimming pools, and recreation buildings.":" The
report projected land costs in the range of $5,000 to $25,000 per acre, with permitted densities of 8
112 spaces per acre. This translates into land costs of $600 to $3,000 per space.
2. Trends in Park Values
There is no systematic source of information on trends in the values of Los Angeles mobilehome
parks. However, because values are a function of rents and the net operating income from
mobilehome parks, trends in values can be estimated, based on trends in rents and data on prevailing
capitalization rates.
The Central Role of Capitalization Rates in Determining Value
An explanation of the role of capitalization rates in determining trends in value is a prerequisite
to describing the trends that have occurred during the past decades. Capitalization rates play an
enormous role in determining trends in the value of income producing real estate.
The capitalization rate is the ratio of net operating income to value. For example, if the
capitalization rate is 6%, properties with a net operating income of$60,000 will be worth ($60,000
1.06) or $1,000,000. Over time, capitalization rates have widely varied, depending on mortgage
interest rates (the cost of capital), rates of return from alternate investments, and expectations about
appreciation. In the past five years, prevailing capitalization rates have been in the range of 5 to 7%,
compared with a range of7.5% to 10% during the prior fifteen year period.
47 Bank of America, "Mobile Home Parksv., Vol, 9, No.7,
Business Reporter, Vol. 13, No.6, p.10.
48
Western Mobilehome
Association,
Mobilehome
p.7i Bank of America,
Park Development,
28
"Mobile Home Parks", Small
2.4 p973-74
edition) ..
The following hypothetical table illustrates the impacts of capitalization rates on values. It sets
forth the variations in the value of a fixed net operating income stream of$5,000 associated with
average capitalization rates over a twenty year period.
14%
f
The Impacts of Variations in Capitalization Rates
011 the VaJueof a Fixed Stream of Income
$120,000
1;2%
10%
4% -J
2%
0%
0
en
m
~
cn
(J)
$20,000
-<t-
Average Cap Rate
--.i<--
Value of Annual Net Operating income (S5,OOO,Vniti
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$-
As noted, average development costs of mobilehome parks in the first part of the 1970's were in the
range of $3,000 to $6,000 per space.
The City's 1984 Mobilehome Study reported that owners paid about $6,000 per space on the
average." However, this sample is of'limited analytical value because it covered over nine parks with
purchase years varying from the 1950's to the time of the study. The respondents indicated that the
current (1984) average value oftheir parks was $18,000.
49 Supra
note 10, p. __
29
In 1984, the average rent was $248. Using a typical operating expense ratio of 40%, the typical
operating expense level would have been about $100/space/month and the typical net operating
income would have been $150/ space/month. Using the prevailing capitalization rate 0 f that time, the
average value per space would have been about $20,000, an amount consistent with the average
value projected by the small group of owners who responded to the City's survey in 1984.
There is not sufficient available data and annual sales of parks are not of an adequiate volume to
project trends in mobilehome park values within the City or even the metropolitan area.
A private service that is widely used by real estate appraisers (CoStar) provides reports on trends
in sales prices for selected categories of real estate. Reports covering parks of 50 or more spaces
within the state indicate that average park values per space declined from about $32,000 in the early
19901s to a level of about $25,000 in the mid-19901s, and increased to about $50,000 in the last few
years. The following chart provides data on average annual prices and average capitalization rates
in each year.
Trends in Catifornia MobHehome Park Values (per space) .,
--Avg
Price.IUnit
--f9--Cap Rate
$60,01)0
12.0
$50,000
10,0
MO,OOO
3.0
$}O.OOO
6,0
$20,000
4"0
$10,000
2.0
<=>
...
$
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Source: CoStar Comps .
., Reported transactions
ranoec
from B to 45 per veal'
30
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Appraisals would be required to make precise estimates of the current value of the mobilehome
parks in the City. However, some estimate of the "scale" of the values of mobile home parks in Los
Angeles can be made. In the current market, capitalization rates for mobilehome park purchases are
in the 6 to 7% range. (This means that the formula for appraising value based on net operating
income is: Value = NO! /.06 or .07.)
Using the average space rent of about $615 in the City and assuming that average operating
expenses (excluding reimbursed expenses) are about $215 space/month (35% of space rents), in tum
net operating income/space/month would be $400 and an annual net operating income per space
would be $4,800 (12 months x $400). Using prevailing capitalization rates market values per space
would be $68,571 to $80,000. ($4,800/.07 or $4,800 /.06)
Much ofthe increase in park values can be attributed to the significant decline in capitalization
rates (from a typical rate of 8 to 9% to 6 to 7%). (If the capitalization rate had remained at the
former levels of 8% or 9%, a park with the foregoing annual net operating income per space would
have a value $53,333 to $60,000 per space.)
The limited data on sales of Los Angeles mobilehome parks within the past five years indicates
a wide range in sales prices, consistent with the wide range in rents. Two substantial sized parks sold
for about $100,000/mobilehome space since 2005. Other parks sold for about $30,000/mobilehome
space.
31
VI. Comparison of Los Angeles Mobilehome Space Rent Stabilization Ordinance (RSO)
with Other Local Ordinances
A. Overview
Like most states, California has adopted extensive regulations of the terms and conditions of
mobilehome park space rentals, which provide that mobilehome owners can be evicted only for just
cause and that they have a right to sell their mobilehomes in place.
In addition, in California, about ninety localities 50 have adopted mobilehome park space rent
regulations in response to the special circumstances surrounding mobilehome park space tenancies. 51
(Most of those jurisdictions only regulate mobilehome park space rents without any apartment rent
controls.)
Typically, the local rent control ordinances in California tie annual allowable rent increases to
the percentage increase in the Consumer Price Index (CPI)-all items. Most of the ordinances do not
permit additional rent increases or limit additional rent increases when a mobilehome is sold in
place. Under all rent control ordinances, park owners are entitled to petition for additional rent
increases in order to obtain a fair return.
In contrast to the unlimited increases that are authorized under the Los Angeles Rent
Stabilization Ordinance (RSO) when apartments are voluntarily vacated, increases upon changes in
mobilehome space tenancy are limited to the lesser of 10% or the lowest rent in the park for a
comparable space. The City's 1984 study of mobile home parks states that "The mobile home sector
requires separate treatment because some aspects of occupancy, ownership, and regulation
distinguish it from the apartment sector.,,52
The following sections describe the rent adjustment provisions ofthe ninety ordinances and the
differences among them in more detail.
50 There may be one hundred ordinances or a few more. This author was able to locate ninety ordinances. Eighty-five ordinances
were reviewed for the purposes of the analysis in this report.
51 Mcbilehome
park space rent regulation
52 1984 City Mobilehome
is very limited outside of California.
Study, p. i
32
B. Annual Rent Increase Standards
TheRSO
Under the RSO, as in the case of apartment rents, annual allowable rent increases are equal to
100% of the percentage increase in the CPl, with a floor on the allowable increase of 3% and a
ceiling of 8%. Increases on changes in tenancy connected with in-place sales of mobile homes are
limited to the lesser of 10% or the lowest rent for a comparable space in the park.
Since the incorporation of the ceiling into the annual rent increase provisions, the eight percent
ceiling has not had any impact. In 1979, 1980, and 1981, prior to the adoption of the 8% ceiling, the
annual increase in the Cl'I substantially exceeded 8%. However, since the ceiling was adopted, the
annual increase in the CPI has never exceeded 6%.
However, the three percent floor has had a notable impact. During eight years since 1995, the
annual increase in the CPI has been less than 3%, thereby triggering the 3% minimum provision in
the ordinance.
Impact of 3% Minimum on Allowable Annual Rent Increases
Under Los Angeles Rent Stabilization Ordinance
Year
Allowable Annual
Increase in Absence
of 3% Minimum
1995
2%
1996
2%
1997
1%
1998
2%
1999
1%
2000
2%
2009
0%
2010
0%
33
Local Mobilehome Park Space Rent Ordinances in California
1. Annual Adjustment Tied to CPI
The vast majority of ordinances provide for annual rent adjustments tied to the increase in the
Cl'I, ranging from 50% to 100% of the percentage increase in the CPr. 35 of the 85 ordinances
reviewed authorize increases equal to 100% of the Cl'I increase, and 32 authorize increases equal
to 75 to 90% of the Cl'I increase.
Under some ordinances, there are no provisions for automatic annual rent increases and park
owners must petition for all rent adjustments. In 1983, the California Supreme Court rejected a
challenge to the constitutionality ofthe Carson ordinance based on its lack of an annual rent increase
provisi on. 53
Allowable Annual Increases
under local MObiiehome Rent Stabilization Ordinances
Allowable
Annual
as Percent
Rent Increase
No. of Ordinances
of CPI Increase
None
7
50%
2
60%-74%
9
75%-90%
32
100%*
35
100%
Los Angeles
* Standards with 100% of CPI up to a cap of 5% or more are considered
100% of CPI increase standards since CPI has increased by more than
5% in only two years since 1983 (when the increases were 5.1% and
5.9%). Two standards with an annual rninrnum of 5% or more are
counted as 100% of CPI standards; actually they usually permit
increases of more than 100% of CPt
53 Carson Mobilehome
Park Owners' Assn. v. City of Carson, 35 Cal.3d 184 (1983)
34
2. Declining Percentage of CPI Increase
Under some ordinances, the allowable increase is tied to 100% of the percentage increase up to
a specified Cl'I increase and declining percentages of additional amounts of the increase in the CPI.
(E.g. 100% of the Cl'Lincrease up to 5% and 75% of the CPlincreaseabove 5%.) In fact, under these
standards the maximum initial rate has been the only rate that has been applicable because the
percentage ceiling on the initial rate has been higher than the percentage increases in the CPI.
3. Minimums and Maximums for Annual CPI Increases
Ten of the ordinances contain floors on the annual rent increases. Five of those ordinances
contain a 3% floor. Thirty-two ordinances contain ceilings. The typical ceiling is 5, 6, or 7%. These
provisions were adopted largely in response to the exceptional inflation of the late 1970rs and early
1980's, when annual increases were in the range of 10%.
Floors for Allowable Annual Increases
No. of Ordinances
Floor for Annual Increase
None
75
2%
2:
3%
5
3%
los Angeles
3.5%
1
5%
2:
Ceilings on Allowable Annual Increases
Ceiling in Annual Increase
No. of Ordinances
None
53
5%
8
6%
14
7%
7
8%
2:
8%
los Angeles
1
9%
35
C. Allowances for Cost Pass-throughs of Specific Cost Increases
Some ordinances allow for pass-throughs for specified types of cost increases in addition to the
annual allowable increases tied to the increases in the CPl. Categories of allowable passthroughs
include rent adjustments to compensate for 1) increases in government fees or tax assessments, 2)
increases in the costs of certain utilities, and/or 3) the amortized costs of capital replacements.
(Generally, but not in Los Angeles, increases for the construction of new improvements (as opposed
to replacements) may not be passed through without the consent ofthe majority of the residents.)"
In viewing these provisions, they should be considered within the context of the otherwise
allowable annual rent increases. For example, an ordinance which provides for annual increases
equal to 75% ofthe percentage increase in the CPI plus a passthrough may provide smaller or greater
increases than a provision of annual increases equal to the full increase in the CPl.
D. "Just and Reasonable" (Fair Return)
Under the City's ordinance, apart from rights to annual rent increases and 10% increases when
a mobilehome is sold in-place, park owners have a right to apply for a rent adjustment in order to
obtain a rent which will provide them with a "just and reasonable" return. "Just and reasonable"
return is defined as a net operating income which is equal to a base year net operating income
adjusted by 100% of the percentage increase in the CPl. In other words, rent increases must be
adequate to cover operating cost increases and permit net operating income to keep up with the
increase in the CPr.
Under this type of standard debt service is not considered as an operating cost. Instead, the
growth in net operating income that must be allowed provides an increasing source of income that
is available to cover debt service and/or provide additional cash flow return on the cash investment.
Only three "just and reasonable" (fair) return applications have rarely been filed under the Los
Angeles ordinance, Numerous fair return applications have been filed in some other jurisdictions.
The purpose of the "Just and Reasonable" return standard and the inclusion of fair return
provisions in all rent ordinances is to insure park owners oftheir constitutional right to a fair return,
The fair return issue has been extensively litigated in mobilehome cases. Cities have the authority
to select the fair return standard to be used under their ordinances. However, regulated property
owners are protected by the right to obtain judicial review in order to determine if the application
of the standard results in a fair return in their case.
54 One ordinance
provides for a passthrough
of increases
in property taxes triggered by the sale of a property.
36
Under most mobilehome park space rent control ordinances, a maintenance of net operating
income (MNOI) standard is used and in virtually every case, when the MNOl standard has been
challenged, the courts have ruled that this type of standard provides a fair return,
A majority of the ordinances with an MNOl standard "index" the base period net operating by
a portion of the increase in the Cl'I (ranging from 40% upwards), rather than by 100% of the
percentage increase in the CPl, as in the case of Los Angeles. The courts have upheld standards
which provide for indexing by 40% of the percentage increase in the Cl'I and have rejected the
argument that 100% indexing is constitutionally required."
Under some ordinances, a return on investment standard is used. However, this type of standard
also suffers from circularity. (The investor determines the investment which in tum determines the
allowable rent.) Furthermore, there is no consensus about what rate should be considered fair and
courts have reached differing conclusions about how the rate base may be measured - historical
investment reduced by depreciation, actual historical investment, or historical investment adjusted
by the increase in the cpr since the time of the investment. The differences among the outcomes
under these alternate measure of the base investment have a very large impact on what rent will
deemed to yield a fair return on investment, largely depending on the length of ownership of the
property. Return on "value" standards have been rejected as "circular," for decades" and are no
longer used.
Base Rent Adjustments and/or Comparability
The courts have held that in the context of maintaining a base period net operating income (cpi
adjusted) park owners are entitled to a base period net operating income that is based on rents that
"reflect" market conditions. The underlying concept is that a regulated property owner should not
55 See H..N. & Francis Berger Foundation v. City of Escondido,
Ventura ,147 Cal. App, 4th 1170 1181-1182 (2007)
127 Cal. App.4th.
1, 15 (Jan. 2005); Stardust v.
56 See e.g. Fisher v. City of Berkeley, 37 CaL3d. 644,680, n.33 (1984, State Supreme Court); Cotati Alliance for
Better Housing v. City of Cotati, 148 Cal.App.3d.280,
287-289 (1983, Court of Appeal); Palos Verdes Shores
Mobile Estates, Ltd. v. City of Los Angeles, 142 Cal.App.3d. 72, 86 (1983, Court of Appeal).
In Fisher, the State Supreme commented: The Cotati Alliance court thus rejected a landlord's claim that a return on
value standard is mandated for an ordinance to be facially constitutional: The fatal flaw in the return on value standard
is that income property most commonly is valued through capitalization
of its income. Thus, the process of making
individual rent adjustments on the basis of a return on value standard is meaningless because it is inevitably circular:
value is determined by rental income, the amount of which is in turn set according to value. Use of a return on value
standard would thoroughly undermine rent control, since the use of uncontrolled income potential to determine value
would result in the same rents as those which would be charged in the absence of regulation. Value (and hence rents)
would increase in a never-ending spiral." (148 Ca1.App.3d at p. 287; accord, Helmsley,[N.J. Supreme Court], 394 A.2d
at pp. 71-72; Niles v. Boston Rent Control Administrator (1978) 6 Mass.App. 135 [374 N.E.2d 296, 300·303].) 37
Ca1.3d. 644, 680, n.33. [bracketed items added by this author for clarification purposes.]
37
be locked into abnormally low rents as a starting point for the basis of future allowable rent
calculations, which depend on indexing a base period return by the CPI.
Some ordinances also provide for the consideration of comparable rents, either within the same
city or within the area, as one factor that should be considered when reviewing fair return
applications. However, no particular weight is assigned to this factor..
E. Allowable Increases Upon In-Place Sales of Mobllehomes
As noted, about half ofthe mobilehome rent stabilization ordinances do not permit any additional
rent increases upon in-place sales of mobile homes. About a third of the ordinances allow limited
rent increases at the time of an in-place sale, and about fifteen percent provide for unlimited rent
increases.
Allowable Rent Adjustments in Mobilehome Ordinances
Upon In-Place Sales of Mobilehomes
No. of Ordinances
No Increase Upon In-Place Sale
Lim ited Increase Perm itted
43
30
(including
No Limit on Increases
L.A.)
12
(Vacancy Decontrol)
Source: Review of 85 by this author
The provisions authorizing limited increases upon the sale of a mobilehome have a variety of
forms. Some, like Los Angeles, contain percentage ceilings. Other contain dollar ceilings. Others
provide for percentage increases with a dollar ceiling on the amount. Limits on the frequency of
these types increases (e.g. only once every three or five years) are common.
38
Standards Authorizing Limited Increases
Upon in-Place Sales of Mobilehomes
Jurisdiction
Increases
Azusa
Chino
Clovis
Fairfield
Fresno
Goleta
on In-Place Muhilehome
Sales
8%
20%
5%
4%**
10%
10%
once time in five years
5%
greater of
$34 or 7%
10%
5%
once in 12 months
15%
Grover Beach
LaVerne
Los Angeles
Lompoc
Malibu
Modesto
10%
limit one time in 5 VIS
5%
limits once in I yr.,
twice in 5 vrs.
diff between CPI increase since '87 &
actual increases
Moorpark
Moreno Valley
lesser of 15% or $80,
limit one time in 5 vears
10%
one time in 3 vears
$25 above maximum in park
Oxnard
Pismo Beach
Pomona
8%
10%,
limit one time in 36 months
10%
10%,
San Jose
San Luis Obispo (city)
San Luis Obispo (county)
Santa Clarita
limit once in 12 months
10%,
Santa Paula
Sonoma
10%1
Thousand Oaks
Tuolomne County
]0%
greater of $34 or 7%
10%
Upland
39
F . Exemptions from Local Rent Regulations
Under state law, spaces covered by leases of one year or more which meet specified conditions
are exempted from local rent regulations. Park owners may not require that current tenants enter into
such leases and most local rent ordinances, including the Los Angeles ordinance, provide that
prospective tenants cannot be required to enter an exempt lease as a condition for approval to move
into the park.
Such leases usually provide park owners with more favorable terms than the applicable rent
regulation. From the mobilehome owner's perspective, they may offer the benefit of terms that
remain in place for the life of the agreement rather than being dependent on the continuation of a
local rent regulation. In some rent controlled jurisdictions, there are parks with a substantial
proportion of spaces covered by exempt leases. In some jurisdictions, residents have reported that
park owners pressure prospective residents into signing exempt as a condition for obtaining park
owner approval for residency.
Most of the parks responding to the survey, 28 out of 35 parks responding did not have any
exempt leases. There are 137 exempt spaces in four of the responding parks. In Oakridge
Mobilehome Park, 170 space rentals are covered by exempt leases. Overall, less than 10% of the
spaces in the responding parks are covered by exempt leases.
40
VII. Comments on Submissions by Coalition. of Park Owners'
The coalition of park owners has made several submissions, which include a proposal
authorizing vacancy increases (increases upon in-place sales of mobilehomes) ranging from 50% to
100% depending on the length of occupancy ofthe departing tenant." (0-5 years - 50%; 6-10 years60%; 11-19 years -75%; 20 years -100%). A brief comment on those submissions is provided here.
A. Market Rents
The coalition projects a gap between current rents of about $700 and "market" rents of about
$1,700, which it contends should be corrected over time. While the park owners contend that a
"market" park space rent would be about $1,700 (an amount well-above the average rents for
apartments), no evidence is presented to support this contention. Although such rents may be
obtained for prime coastal locations, information available through brokers indicates that the high
end of park space rents in neighboring cities without rent regulations are in the range of $1,100 to
$1,300.
In the case of mobilehome park space rentals, the "market" is not characterized by the supply and
demand mechanisms and the ability of renters to choose to move that characterize a classical
market. In the case of mobilehome park space rentals, there is a virtual absence of vacancies and in
reality there is no possibility that the supply of rnobilehome spaces can be increased in response to
the shortage. Demand can increase, but the supply will not increase no matter how much the demand
increases. Also, the tenant has an asset that is virtually attached to its present location.
Under the rent stabilization ordinance, the CPI price index is used to set allowable rent increases.
This mechanism provides for increases in rents comparable to increases in prices in the balance of
the market economy.
B. Operating Costs
The coalition notes that mobilehome parks, unlike apartments, have an extensive infrastructure
to maintain, upgrade, and replace. An engineers report submitted by the coalition projects the
extensive length of the infrastructure systems in mobilehome parks and projects typical costs for
57 Letters from Richard H. Close, Gilchrist and Rutter (Santa Monica)
Division Director, Nov. 22, 2010; Jan. 19, 2011; and, March 8, 2011.
41
to Council Members
and/or Rent Stabilization
replacing these systems." However, the Coalition does not submit data which indicates typical costs
that parks actually incur for maintaining these systems.
The coalition also submitted an income and expense analysis, based on data from three
mobilehome parks, which indicated that operating expenses had increased by 38.1 % over the past
five years." However, this size sample is very small and the increases it reports are not in keeping
with the fact that the CPI has only increased by about only 10% in the past five years.
In any case, under the "Just and Reasonable" return standard under the RSO park owners have
a right to petition for rent adjustments that will provide for rent adjustments that will cover operating
cost increases and for growth in net operating income by the rate of increase in the CPI. Under the
standard, the amortized cost of capital improvements is considered as an operating cost.
C. Projection of Mobllehome Values
The submission of the coalition also projects an average sales price for mobilehomes of
$146,894, based on data from five mobilehome parks. However, one of those parks had an
extraordinary average of $221,060 and another had an average of $287,599.60 The data in this
report, which is based on 1108 sales from 2007 through 2010 indicates that the average for 2007
through 2010 was $92,059.
VIII. The Impacts of Vacancy Decontrol
The proposal of the Park Owners Coalition for 50% to 100% increases upon in-place sales
approaches a vacancy decontrol proposal, because the increases that would be authorized may not
differ substantially from the increases that could be imposed in the absence of any rent regulation.
In the case of most in-place sales, the allowable increase, which would be tied to the length of
occupancy of the departing mobilehome owner, would be 75% to 100%. (75% increases are
proposed upon in-place sales following tenancies of 11 years or more and 100% allowances upon
58 Lawrence O. McDermott (Civil Engineer), "Mobilehorne Park Operational Cost Analysis & Apartment
Comparison" (Dec. 30, 2010), submission accompanying letter of January 19, 20011 from Richard Close, Gilchrist
& Rutter to Director Rent Stabilization Division.
At the suggestion of the park owners' coalition, the City's survey of park owners included a question about the
length of the infrastructure lines in the park. Very few respondents reported this information.
59 Clarke Fairbrother, Newport Pacific (Irvine California), Dec. 7, 2010. submission accompanying
19,20011 from Richard Close, Gilchrist & Rutter to Director Rent Stabilization Division.
letter of January
60 Id., Attachment 2. Also, the average original prices in the data indicate that the sample is largely for new
mobilehornes, while most of the mobilehornes in the parks are at least twenty years old and a majority were
manufactured before] 980.
42
in-place sales following tenancies of20 years or more. The submission ofthe Coalition indicates that
20 years is the average length of tenancy. The allowable space rents that would commonly result
from such provisions (e.g. $1,000 to $1,400) would be comparable to or above the high end ofspace
rents in neighboring localities without rent regulations.
Over the years there has been extensive discussion, debate, and litigation over the impacts of
vacancy control and vacancy decontrol from a fairness and housing policy perspective. The issue of
whether or not there should be a vacancy decontrol provision has probably been debated every time
a locality has adopted a mobilehome park space rent stabilization ordinance.
Numerous local mobilehome park rent stabilization ordinances include findings that vacancy
control is necessary in order to preserve the investments of mobilehome owners and other ordinances
are clearly based on that premise. These policies are based on a concern that unlimited rent increases
upon in-place sales of mobilehomes would drastically reduce the values of mobilehomes.
When mobilehome parks were constructed, it was clear that investments by mobilehome owners
substantially exceeding the investments of the park owners would be an essential ingredient for the
success of the park enterprises and would create a type oftenancy that would provide mobilehome
park owners with a particularly secure flow of rental income. As one federal trial court decision
noted, park owners fully understood and encouraged mobilehome owners to make substantial
investments in their mobilehomes:
It is clear that most, or even all, of the tenants have invested more than the value of the
coach itself to move into the park. New tenants have paid for placement value held by
previous tenants. Therefore, tenants have an expectation thai they will be able to substantially
recoup that tnvsstrn ant upon sale of the coach. While that expectation many not be altogether
wise, it is not unreasonable. The park owners are business people who understand that the
operation of a mobllehome park involves an economic relationship in which both park owner
and the tenant must make a substantial investment-Indeed, they have encouraged the tenants
to make the investment and to expect a return on it.51
The viability of mobilehorne ownership depends on incentives for mobilehome owners to
continue to invest in maintaining and upgrading their homes, which in tum depends on the existence
of the ability to recoup these investments. If there is no limit or a limit of 50% to 100% on the
amount that the rents may be increased when a mobilehome is sold in place, this viability will be
drastically diminished. In cases of exceptional rent increases, rnobilehome values have plummeted
and have been reduced to nominal levels.
In terms of mobilehome park income, when a fixed percentage adjustment is authorized, parks
typically will realize an additional increase in rental income every ten years which would be equal
to at least half of the amount of the fixed vacancy allowance. For example, if 10% increases were
61 Adamson
Companies
v . City of Malibu, 854 F.Supp.
1476, 1489 (1994, U,S.DistCl"
43
Central Dist. California)
authorized upon turnover, park income would be increased by an additional 5% over a each ten year
period, because the rent of half of the spaces could be increased by an additional 10%, in the case
of an average rate of turnover.
The survey data for Los Angeles indicates that the increases in mobilehome park space rents have
exceeded the increase in the CPl, due to the combination of the full Cl'I annual increases and the
allowable vacancy increases. Such increases allow net operating income to increase at a faster rate
than the Cl'I if expenses increase at the same rate as the CPt At the same time, park owners are not
facing the vacancy risks that are now standard in the balance of the real estate market.
44
Appendix A· L:
Mobile
. of Mobile Home Parks in the City
Los Angeles
Home Parks in the Citv of Los Anaeles
Park Name
AM TRAILER HOME ESTATES
ELM LANE TRAILER PARK
MONTE VISTA MOBILE ESTATES
OAKDALE MOBILE-HOME
PARK
SHERMAN GROVE M/H PARK
SIERRA SPRINGS (VICABOB Trailer Village)
SUNLAND TRAILER PARK
RESEDA M/H PARK
BIRMINGHAM TRAILER VILLAGE
FASSLER TRAILER PARK
FOOTHILL PALMS M/H PARK
LAUREL CANYON MOBILE ESTATES
PARK ROYALE
SHADY GROVE TRAILER PARK
SUN DOWN TRAILER PARK
,/ALENCIA TRAILER GROVE
VALLEY VILLAGE M/H PARK
WOODLEY TRAILER LODGE
BERMUDA M/H COMMUNITY
BLUE STAR PARK, INC ~
GLENOAKS MOBILE MANOR
GOLDEN TRIANGLE
LOS OLIVOS M/H PARK
LUMARK TRAILER PARK
MISSION MOBILE MANOR
MONTEREY MANOR
OAKRIDGE MOBILE-HOME
PARK
RANCHO HERMOSA
SANTIAGO ESTATES
ISHADOW HILLS MOBILE HOME PARK
SHELTER ISLE
SYLMAR. MANOR
TAHITIAN MOBILE·HOME
PARK
WARD'S MOBILE HOME PARK
PALISADES TRAILER BOWL
TAHITIAN TERRACE
CANOGA MOBILE ESTATES
CASCADE MOBILE CILLA ••
CHATSWORTH
M/H PARK
ETON MOBILEHOME
PARK
INDIAN HILLS VILLAGE
r<.ONA KAI
NORTHRIDGE
MOBILE·HOME
PARK
RIVIERA MOBILE ESTATES
SUNBURST MOBILE-HOME
PARK
VALLE VERDE COURTYARD
EAGLE ROCK SPRINGS TRAILER
MONTEREY TRAILER PARK
A-1 TRAILER PARK
ARROW TRAILER PARK
EL RANCHO VERDE
HARBOR CITY M/H PARK
IIViERLES MANOR MOBILE PARK 2
~ALOS VERDES RANCHO M/H PARK
PALOS VERDES SHORES MOBILE ESTATES
WILMINGTON
M/H LODGE
ABC WISHING WELL
Address
660 SAN FERNANDO ROAD LOS ANGELES, CA 90065
7337 ETHEL AVE. NORTH HOLLYWOOD,
CA 91605
8100 FOOTHILL BLVD. SUNLAND, CA 91040
10799 SHERMAN GROVE AVE. SUNLAND, CA 91040
7560 WOODMAN PLACE, VAN NUYS, CA 91405
6545 WILBUR AVE. RESEDA, CA 91335
7740 BALBOA BLVD. VAN NUYS, CA 91406
11167 PENROSE ST. SUN VALLEY, CA 91352
12001 FOOTHILL BLVD. LAKE VIEW TERRACE, CA 91342
9051 LAUREL CANYON BLVD. SUN VALLEY, CA 91352
7650 BALBOA BLVD. VAN NUYS, CA 91406
16811 SATICOY ST. VAN NUYS, CA 91406
8391 SAN FERNANDO SUN VALLEY, CA 91352
7800 BALOA BLVD. VAN NUYS, CA 91406
8250 LANKERSHIM BLVD. NORTH HOLLYWOOD, CA 91605
7936 WOODLEY AVE. VAN NUYS, CA 91406
10812 LANGDON AVE MISSION HILLS, CA 91342
12401 FILMORE ST. SYLMAR, CA 91342
10471 GLEN OAKS BLVD. PACOIMA, CA 91331
10811 COLUMBUS AVE. MISSION HILLS, CA 91345
15831 OLDEN ST. SYLMAR, CA 91342
12301 SAN FERNANDO ROAD SYLMAR, CA 91342
15300 BRAND BLVD. MISSION HILLS, CA 91345
10900 SEPULVEDA BLVD. MISSION HILLS, CA 91345
15455 GLENOAKS BLVD. SYLMAR, CA 91342
16079 YARNELL ST. SYLMAR, CA 91342
13691 GAVINAAVE,
SYLMAR, CA 91342
12600 VAN NUYS BLVD. PACOIMA, CA 91331
10965 GLENOAKS BLVD. PACOIMA, CA 91331
13120 BRADLEY AVE. SYLMAR, CA 91342
15445 COBALT AVE. SYLMAR, CA 91342
12245 SAN FERNANDO ROAD SYLMAR, CA91342
16321 PACIFIC COAST HWY PACIFIC PALISADES. CA 90272
16001 PACIFIC COAST HWY PACIFIC PALISADES, CA 90272
8811 CANOGA AVE. CANOGA PARK, CA 91304
14748 SAN FERNANDO ROAD SYLMAR, CA 91342
21500 LASSEN ST. CHATSWORTH,
CA 91311
8901 ETON AVE. CANOGA PARK, CA 91304
11401 TOPANGA CANYON BLVD. CHATSWORTH,
CA 91311
8800 ETON AVE. CANOGA PARK CA 91304
19120 NORDHOFF ST. NORTHRIDGE.
CA 91324
8801 ETON AVE. CANOGA PARK, CA 91304
21001 PLUMMER ST. CHATSWORTH,
CA 91311
20652 LASSEN ST. CHATSWORTH,
CA 91311
5051 ARGUS DRIVE EAGLE ROCK, CA 90041
6411 MONTEREY ROAD LOS ANGELES, CA 90042
1280 PACIFIC COAST HIGHWAY HARBOR CITY, CA 90710
1523 WEST 259TH ST. HARBOR CITY, CA 90710
1501 PALOS VERDES DRIVE HARBOR CITY, CA 90710
760 WEST LOMITA BLVD. HARBOR CITY, CA 90710
1000 NORTH FIGUEROA ST. WILMINGTON
CA 90744
26200 FRAMPTON AVE. HARBOR CITY, CA 90710
2275 WEST 25TH ST. SAN PEDRO, CA 90732
900 EAST DENNI ST. WILMINGTON,
CA 90744
20315 DENKER AVE TORRANCE
CA 90501
- Blue Star MHP contains 186 spaces; only 30 spaces are located within the City of Los Angeles.
# of
Spaces
CD
APN
1
5453-010·006
2327 -001-056
2559·001 ·026
2555-001-007
2555-001-005
2328-001-006
2560-004-008
2128-003-017
2205-007-015
2408-023-002
2531-016-017
2629-032-005
2205-008-023
2205·008-008
2632-002-001
2205-007-026
2311-001-001
2206-006-003
2664-015-032
2526-023-049
2537 -001-025
2615-001-006
2603-015-028
2611-008-008
261 5·001·001
2615-001·003
2582-002-017
2603-009-014
2580-017-007
2532-008-008
2536-013-007
2501-008-051
2501-005-008
2611-008-020
4414-021-025
4414-021-024
2779-019-025
2601-004-009
2746-005-006
2779-017-020
2723-021-084
27
32
75
86
76
135
52
108
187
12
94
60
145
23
44
63
196
26
194
30
70
29
81
105
95
71
600
93
303
2779·016·015
2784-001·136
116
168
151
118
185
31
15
15
15
2779-016-009
2746·007 -003
2748-004-025
5686-009-004
5312-003-029
7411-019-016
7411-007-047
7411-015-028
15
15
15
15
7413-022-011
7416-004-017
7411-022-030
7563-006-019
15
15
7425-007-017
7351-017 ·020
2
2
2
2
2
2
3
6
6
6
6
6
6
6
6
6
6
7
7
7
7
7
7
7
7
7
7
7
7
7
7
7
7
11
11
12
12
12
12
12
12
12
12
12
12
14
14
96
260
66
236
39
173
158
199
5
19B
111
138
22
91
15
131
192
87
93
242
59
34
6526
r
Appendix B
Ro/.'lt .stc:t::i~.:;t~cn nf.n~i,')n
";2DC ~/-l_ 1:~·S:t~2~.
FK':~::'··
Lcs ~.i1~,e~e-d.
CJ\ £<·:'C';7
s:
C:lt
FAX2:3 oDB.8c1~
tment
SURVEY OF CITY OF LOS ANGELES
Antonio R~ViliaraigoXl. Maym'
MOBILE HOME PARKS
~\~~~-~,~~:"":~'~(~">:'::
,·i;:.
....
><\: ':.'/';'.
'
;i:'~':
:.,.
~;...'. ,.' .'.:-
,.';
'"
."',
.
::.'
Man~~,
Dcugl<ls '~~Ih{ie, G8n"ral
:,.:.
"~:'<c~'.':"\"":::
"~
.c'
..,:
':i'!');:~::,L:~;
"
:,:.
1. Park Name:
2. Park Address, City, State, Zip:
3. Contact Person:
1
4, Year Park Constructed:
1
I Email:
Phone No.:
--
5. Number of Acres:
I
6. Total Number of Spaces:
! 7.
How many spaces in the Park are vacant?
8. Number of mobile home spaces occupied by homes that are:
Singlewide?
g, Streets:
Ml1esif known:
12.Water lines:
Miles if known:
15, Fire Hydrants:
No.if known:
Yes 0
NoD
Doublewide Spaces?
10. Gas lines:
Miles if known:
13, Sewer lin es:
Miles if known:
Yes 0
16.Club House:
17, Pool:
Yes 0
19, Allowable Age Groups:
Seniors Only: Yes 0
No 0
T riplewlde?
NoD
NoD
11. Electric Hnes:
Miles if known:
14.Landscaping:
Acres if known:
18. Other facilities:
Type?
All Ages: Yes 0
Yes 0
NoD:
Yes0
NoD·
.
No 0
20, What is the average rent for occupied spaces?
(Exclude separate charges for utllities.)
~ __ .__ .
----~~~~------~------------------_4
21,What is the range of rents? If most rents are in a certain range, please indicate.
22. What uHlities are included in the rent?
Gas:
Yes 0 No 0
Sawsr: Yes 0 No.O
Electric: Yes 0 No 0
Refuse: Yes 0 No D
Water: Yes 0
No 0
List any other utllities included In the rent:
25, What are \he requirements for mobile homes being moved into'the park? (e·9. only new, up to a certain aqe-size or
condition)
26. If known, how many homes in the Park were sold to new tenants in:
2010?
2009?
2008?
2007?
2006?
Please return the survey in the enclosed envelope by March 25, 2011. For questions, please contact
Rosa Benavides at 213-808-8837.
Thank you for yourhelp!
B-1
Appendix C
Southern CaU'omia
Mobile Home Park Snaee Rent Control..... ,.
Annual Increases
Jmisdictioil
Amount
Floor
Ceiling
PassThrougbs
Bees
Increases {gIll InPlace Mobitehome
Sales
special tax,
assessments.go
v services
Azusa
IOO%CPI
Beaumont
IOO%ofCPJ
to highest for
comparable spaces
Calimesa
80%of CPI
unlimited
7%
8"10
in "mY
-
none
camarillo
Carpinteria
Carson
unlimited
75%ofCPI
none
none
cap imp.
none
up to park avg. for
comparable spaces
75%ofCPI
Cathedral City
6()'l.l"ofCPI
20%
Chino
60%ofCPI
unlimited
Colton
60% CPI unless
tenants request
Escondido
unlimited
...
unlimited one time
only
loo%ofCPI
Fontana
none
S%
Gardena
gov't required
cap. Imp
?)%ofC?!
10%
once per five years
Goleta
lOO% of CPI up to
50/<>,
75%ofCPI
Grover Beach
none
Hemet
Indio
Lancaster
LaVeme
Los Anaeles
none
up
?5%ofCPl
comparable
none
lOO%ofCPI
7%
lO(}Q1o
of CPI
3%
specified
assessments
7%
greater of
$34or7%
10%
5%
50"/0
of CPI inc> 10%
100'/0 of CPI
once in 12 months
2%
Malibu
Moorpark
to
seaces in Dark
6O%ofCP!
75% ()fCPI
Lompoc
5%
~~-"QI.
5%
gov't fees &
necessary cap,
15%
1"""
lOO%CPl <7%
5%
2/3 CPI 7>18%
once in 1 yr.,
m""
1411%
twl"-,, in'" """
C-1
· ---
Annual Increases
J urlsdlctlcn
Amount
65%ofCPI
Floor Ceiling
5%
PassThroughs
~;'I"~
8%
increased cost
gov't services
diff'between CPI
increase since '87
& actual increases
8%
gov't
assessments
none
Moreno Valley
7S%ofCPI
Oceanside
IfCP! <4'%-100'%
CPr. If CPI 4-9% ...
4% 01' 75% of CPt
IfCPl > 90/(>"
6.75%
or 67%CPI
Oxnard
Palm Desert
Pismo Beach
Pomona
~
ho Mirage
Increases on InPlace Mobilehome
lesser of 15% or
$80, limited to one
time in 5 years
75%ofCPI
none
10%
once in 3 vears
$25 above
maximum in Dark
up to average in
Dark
75%ofCPI
1000/0ofCPI
5%
75%ofCPI
100% of CPI up to
4%,75% ofCPI
4% to 90/0,25% of
CPlover9%
none
Redlands
prop.tax
increase on
sale.capital
80%ofCPI
unlimited
Riverside
up to highest rents
necessary cap.
comparable spaces
Imp.
in park
necessary cap.
none
,
lOO%ofCPi
Riverside County
San Bernardino
San Juan Capistrano
80"hofCPl
Imp.
lOO%ofCPI
100% of CPI up to
50/0,75% of en
San Luis Obispo (city)
over 5%
60%ofCPI
San Luis Obisoo (count
Santa Clarita
San Marcos
Santa Barbara County
Santa Paula
Thousand Oaks
Upland
Ventura Citv
west Covina
Yucaipa
lOO%CPI
none
service cost
increase
nassthronzh
3%
6%
govt services
utility costs
none
75%ofCPI
7%
7%
75%ofCPI
75% ofCPI
100;"
100/<>,
limit once in
12 months
none
lO%, limit once in
12 months
none
unlimited
r-
80%ofCPI
Increase up 8.750/0,
50%ofCP!
increase over 8.75%
lOO%CPI
100%ofCPI
800hofCP]
10%, limit one
increase/36 months
pre-existing
land lease,
gov't fees
5%
5%
9%
greater of
$34 or 7%
none
unlimited
none
C-2
Northern) California Mobile Home Park Space Rent Control Ordinances
#of
Spaces
Jurisdictiml
Annual Increases
Amount
Floor
PassThroughs
CellinI!:
Increases
00
In-
Place
Mobilehome
Sales
6,315
Alameda County Uninc.
American Canyon
Beneda
Calistoga
Capitola
Cloverdale
-
843
266
555
677
175
Clovis
Concord
1,412
Contra Costa Ctv Uninc,
Cotati
Fairfield
6,350
Fremont
Fresno
Gflrov
Hayward
Healdsburg
Merced
Milpitas
112
851
732
Rocklin
Rohnert Park
Salinas
San Mateo County Uninc,
San Jose
San Rafael
3%
60% ofCPI
cap.imp.up to
5% of rent
6%
utilities, prop.
Taxes, gov,
fees,
assessments up
to 5% of rent
349
2,397
75
624
566
Modesto
agreement option
Morgan Hill
Novato
Pacifica
Petaluma
Pleasanton
5%
90% CPI up to 3%
80% CPI 3 to 4%
700/0 4 to 6%
6%
any rent increase may be challenged in a hearing
lOO%ofCPI
6%
100%ofCPI
5%
none
up to
80%CPI
5%
52%of5-10%
25%> 10%
60%ofCPI
2%
6%
new cap. imp.
75% ofCPI
lOO%ofCPI
6%
lOO%ofCPI
6%
816
654
93
874
2,684
10,756
Scotts Valley
Sebastopol
5,797
3,754
529
205
median
None
None
None
5%
None
None"
None
4%**
None
10%
Unlimited
None
75%ofCPI
100%ofCPI
75% ofCPI
100010ofCPI
6%
None
None
Unlimited
None
8%
permanent vd
None
Unlimited
100% ofCP! - 1/2%
75%ofCPI
75%ofCPI
75%ofCPI
3%
7%
legal challenge
500100fCPI
100% ofCPI
100"/0 of
lJ
tax inc.
cap. rep
6%
3.5%
100".4ofC?I
C-3
7%
6%
None
10% once/
5yr:s
ndine:
112
cer
None
- None
8%
5%
prop
Santa Cruz County Uninc
Santa Rosa
below park
75% ofCPI
80% ofCPI
5%
3%
6%
60%ofCPI
6%
100"10ofCP!
any rent increase may be challenged in a hearing
5%
50%.ofCPI
prop tax inc. on
6%
sale
100% ofCPI
100% of CPI < 5%,
75% ofCPI Inc 5 to 10"/0,
66% of CPI > lO"lo
1,316
1,467
up to $25 if
prop tax inc,
112 CSlJ. rep
None
None
} 00/01
36mol'lths
None
Jurisdiction
Sonoma
Sonoma County Uninc,
# of
Spaces
1,119
2,637
Annual Increases
Amount
Floor
80% ofCPI
100% ofCPI
Cellini!':
PassThroughs
Increases Oil InPlace
10% or up to
minimum rent
None
5%
6%
gov't assess
Tuolomne County
Union City
896
1,085
100% ofCPI
90%ofCPI
Vacaville
1,244
100% ofCPI
Vallejo
Watsonville
1,254
75%ofCPI
amortized cost
correct code
violations
7%
5%
Capital
Replacements
Capital
Replacements
70% ofePI
10%
None
None
None
None
Gov't
Woodland
lesser of CPI or 3%
C4
assessments
None
Appendix D ~ Author's Resume
Kenneth Kalvln Baar
Urban Planner & Attorney
2151% Stuart St. Berkele~, Ca. 94705; Tel.: (510) 525-7437
Education:
B.A., 1969, Wesleyan University, Middletown, Conn. Major: Government
J.D., 1973, Hastings College of Law, Univ. of California, San Francisco, Ca.
'"
M.A., 1982, Urban Planning, University of California at Los Angeles
Ph.D., 1989, Urban Planning, University of California at Los Angeles
(Dissertation topic: "Explaining Crises in Rental Housing Construction: Myth and
Schizophrenia in Policy Analysis")
Foreign languages:
French and Italian
Teaching:
Visiting Professor (Fulbright Scholar), Technical University, Tirana, Albania
(Introduction to urban planning) (2002-2003)
Visiting Assistant Professor, Urban Planning Department, School of Architecture, Planning, and
Preservation, Columbia University, New York (1994 - 1995) (courses: planning law, introduction to
housing, comparative housing)
Visiting Professor (Fulbright Scholar). Budapest University of Economic Sciences (Sept. 1991- June 1993)
Instructor, San Francisco State University, Urban Studies Program (1983-1984)
Short Courses, Series of lectures
Polis UniverSity, Tirana, Albania, urban planning studios (two week courses, 2009 & 2010)
Netherlands Ministry of Housing (1997)
Kiev University law School, real estate law (1992, one week course)
Technical University of Budapest, Planning Department Series of lectures Professional Extension Courses
and Undergraduate Courses (1991-1992)
D-1
Projects: 198()-2(l1()
Study of Performance of Rental Housing Investments for the City of Los Angeles {in association with
Economic Roundtable, Los Angeles)(2007-2009}
Consultant to California cities and counties on rnobllehorne park rent control policies, drafting of
ordinances, fair return issues, and/or mobilehome ownership characteristics and market studies (19852010) (American Canyon, Azusa, Capitola, Carpinteria, Carson, Ceres, Chula Vista, Citrus Heights,
Clovis, Cotati, Escondido, Fremont, Fresno, Healdsburg, Milpitas, Marina, Modesto, Montclair, Oceanside,
Palmdale, Palm Desert, Perris, Riverbank, Rohnert Park, Salinas, San Marcos, Santa Cruz County, Santa
Rosa, Santee, Simi Valley, Sonoma, Thousand Oaks, Vallejo, Ventura, Visalia, Watsonville, Yucaipa)
Consultant to Takoma Park, Maryland, Drafting Rent Stabilization ordinance (2006-2007, 2009~2010)
Institute of Transportation and Development Policy (New York City), Study on European policies governing
location of shopping malls (2001-2002)
Open SOCietyBudapest (Soros Foundation), Study on contracting out of public services and freedom of
information in Hungary, Czech Republic, Romania, and Slovakia (2000-2001)
.r
Consultant to World Bank (Budapest office), Studies on municipal contracting out of public services,
policies for the provision for the provision of district heating, and land use policies in Hungary (1998-1999)
Urban Institute, U,s. Aid for International Development (A.LD.) funded technical assistance, Hungarian
Subnational Development Project (1998 & 1999)
Consultant, Institute for Transportation and Development Policy, to East European Organizations on
Transportation Policies (1997-98)
U.SALD. funded technical assistance to Albanian Ministry of Construction (Sept. 1993- March 1994)
Study of Hungarian Land Use Regulations (1992, publication and technical assistance sponsored by
Urban Institute, Wash. D.C.)
Report for Hungarian Ministry of Justice, Comparison of Landlord-Tenant law in France, United States,
and Hungary (1992, funded by Urban Institute, Wash. D.C.)
Consultant, City of Santa Monica, Cal., Incentive Housing Program
Preparation of a Guide for New Jersey Rent Control Boards on Fair Return Standards and Landlord
Hardship Applications (National Housing law Project, 1981)
Research and Writing Articles on Inequalities in Property Tax Assessments (Legal Services Corporation,
Washington, D.C., 1982-83)
Preparation of apartment operating cost studies for the cities of Berkeley, Santa Monica, and Cotati,
California)
0-2
/
Publications
Articles
"Fair Return under Mobilehome Park Space Rent Controls: Conceptual and Practical Approaches; 29
Real Property Law Reporter 333 (Sept. 2006)
"Legislative Tools for Preserving Town Centres and Halting the Spread of Hypermarkets and Mans
Outside of Cities" published in Etudes Foncieres (land Studies) No. 102, pp, 28~34 (March~ApriI2003,
Paris, translated into French); also published in Falu, Varas, €IS Regio (Village,Town, and Region), issue
no. 2, pp. 11-22 (2003), (Budapest, translated into Hungarian)
"Contracting Out Local Public Services in a Transition Economy," Review of Central and Eastern
European Law, Vol. 25, No. 4, 493~512, September 2000, (Leiden, Netherlands)
"Contracting Out Municipal Services: Transparency, Procurement, and Price Setting Issues", Hungarian
Public Administration, Vol. 49, No.3, May 1999 (translated into Hungarian)
"laws Protecting Mobilehome Park Residents", Land Use and Zoning Digest Vol. 49, 3-7 (Nov. 1997,
American Planning Association)
"The Anti-Apartment Movement in the U.S. and the Role of Land Use Regulations in Creating Housing
Segregation", Netherlands Journal of Housing and the Built Environment, Vol. 11, no.4, 359-380 (1996)
"La resistance au logement collectif', Etudes Foncieres, Vol. 67, 4448, (June 1995, Paris, Association
des Etudes Foncieres)
and
"II Movimento Contro Gli Edifici Multifamiliari Negli Stati Uniti, Storia Urbana, Vol 66, 189-212 (1994, Milan,
Italy)
(translated versions of "The National Movement to Halt the Spread of Multi-family Housing (18901926)", JournaloftheAmerican
Planning Association, Vol. 58, no. 1, 3948, Deo.1991)
"lrnpacto del precio del suelo y de las normae sobre su uso en ei precio y la dlstribucion de las viviendas
en USA", La Vivienda, no. 23,43-51 (1993, National Mortgage Bank of Spain) ["The Impact of Land Costs
and Land Regulations on the Cost and Distribution of Housing in the United States"]
"A Terutefrendezes Dilemma! a Demokratiku5 Piacqazdasaqokban", Ter es Tarsadalotn, Vo1.6, no. 1-2,
89-99 (1992, Budapest) ["Dilemmas of Land Use Planning in a Democracy with a Market Economy",
Space and SOCiety]
"The Right to Sen the 'lrn'mobile Manufactured Home in Its Rent Controlled Space in the 'Im'mobile Home
Park: Valid Regulation or unconstitutional Taking?", Urban Lawyer Vol. 24, 107-171 (Winter 1992,
American Bar Ass'n)
"The National Movement to Halt the Spread of Multi-family Housing (1890-1926)", Journal of the
American Planning Association Vol. 58, no. 1, 39-48 (Dec. 1991)
"EI Control de Alquileres en Estados Unidos" Estudios Territor/ales, Vol. 35, 183-99 (1991, Madrid) ["Rent
Control in the United States"]
"Would the Abolition of Rent Controls Restore a Free Market?", Brooklyn law Review, Vol. 54, 1231-8
(1989)
"A Choice of Issues" (Introduction to articles on the impact of rent controls on the property tax base),
Property Tax Journal Vol. 6, no. 1, 1-6 (March 1987, International Ass'n of Assessing Officers).
"Facts and Fallacies in the Rental Housing Market", Western City, Vol. 62, no.s, 47 (Sept
1986, California League of Cities)
"California Rent Controls: Rent Increase Standards and Fair Return", Real Property Law Reporter, Vol. 8,
no. 5, 97 104 (July 1985, California Continuing Education of the Bar)
a
"Rent Control: An Issue Marked by Heated Politics, Complex Choices and a Contradictory Legal History",
Western City, Vol. 60 (June 1984)
"Rent Controls and the Property Tax Base.The Political-Economic Relationship",
Vol. 3, no. 1, 1-20 (March 1984)
Property Tax Journal
"II Dibattito Sui Controllo Degli Affiti Negli Stati Uniti", Bolletlno Daest (Sept 1984, University of Venice)
["The Debate Over Rent Controls in the United States"]
"Guidelines for Drafting Rent Control Laws: Lessons of a Decade", Rutgers Law Review, Vol. 35, 723885 (1983)
"Defining 'Fair Return' For Rent Controlled Landlords», 59 New Jersey Municipalities (no. 3) 24 (1982)
"Property Tax Assessment Discrimination Against Low-Income Neighborhoods", Urban lawyer, Vo1. 13,
333-405 (1981, American Bar Ass'n)
abridged versions:
Clearinghouse Review, Vol. 15,467-486 (1981),
Property Tax Journal, Vol. 1, (no. 1) 1-50 (March 1982)
(Coauthors Saar and Keating) "Controlling Rent Control", 2 New Jersey Reporter (no. 4) 19-25 (October
1981)
"land Banking and Farm Security Loans", Economic Development law Project Report, Vol. 8, no. 4,
1978)
"Rent Control in the 1970's: The Case ot the New Jersey Tenants' Movement", 28 Hastings Law Journal
631-683 (i977)
(Coauthors Pearlman and Saar) "Beyond the Uniform Relocation Act: Displacement by State and Local
Government. Clearinghouse Review, Vol. 10, 329-345 (i976)
(Coauthors Baar and Keating) "The last Stand of Economic Substantive Due Process: The Housing
Emergency Requirement for Rent Control", Urban Lawyer, Vol. 7,446-509 (1975)
Chapters in Books
Baar, "Contracting Out Municipal Services: Transparency, Procurement, and Price-Setting Issues," (ch,
15), "land Use Regulation" (ch.21), and "Financing and Regulating District Heating (ch 26)
Intergovernmental Finance in Hungary (2005, World Bank)
"Open Competition, Transparency, and Impartiality in Local Government Contracting Out of Services"
(Chapter 2), NavigatiDn to the Market Regulation and Competition in local Utilities in Central and Eastern
Europe, ed. Peter; and Horvath (2001, local Government and Public Service Reform tntltiative, Open
Society Institute, Budapest)
"New Jersey's Rent Control Movement" (Chapter 10) and "Controlling "lm"Mobile Home Space Rents",
(Chapter 13), ed. Keating, Tietz, 8. Skaburskls, 'Rent Control: Regulation and the Rental Housing Market
(1998, Center for Urban Policy Research, Rutgers University.
Hungarian Land Use Policy in the Transition to a Market Economy with Democratic Controls",
Land Tenure and Property Development in Eastern Europe (1993, Association des Etudes Foncieres,
Paris)
"Rent Control", California Residential Landlord-Tenant Practice, Chapter 9 (1986, California, Continuing
Education of the Bar)
Books
Editors Baar and Pojani, Urban Planning in a Market Economy, (Tirana, Albania 2004); author of chapters:
"Decentralization in Service Provision and Urban Planning - An International Perspective, Private",
"Property Rights, Public Expropriations, and Public Rights to Undertake Urban Planning "Contracting Out
Public Services in Hungary - Regulatory, Contracting and Transparency lssues", Coauthor of chapters:
"Urban Planning in a Democracy with a Market Economy', "local Service Provision in Albania".
H
,
Reports
"Impacts of the Rent Stabilization Ordinance on the Outcomes of Apartment tnvestrnents" (Ch. 4) and
"Rent Increase Standards: Los Angeles Rent Stabilization Ordinance (RSO) and Comparison with
Ordinances in Other California Cifies" (Ch. 5), Economic Study of the Rent Stabilization Ordinance and the
los Angeles Housing Market, prepared for City of Los Angeles Housing Dept 2009)
Court Opinions Citing
Mobilehome Owners
law Review Articles by Kenneth Baal" on Rent Regulation andlor
Helmsley v. Borough of Fort lee, 78 N.J. 200; 394 A.2d. 65 (1978) New Jersey Supreme Court
Fisher v. City of Berkeley, 37 Cal. 3d. 644; 209 CaLRptr. 682 (1984) California Supreme Court; affirmed,
475 U.S. 260 (1986)
Oceanside Mobile Home Park Owners Association v. City of Oceanside, 157 Cal.App.Sd. 887 (1984)
California Court of Appeals
Mayes v. Jackson Township, 103 N.J. 362; 511 A.2d. 589 (1986) New Jersey Supreme Court; cart.
denied, 479 U.S.1090 (1987).
Yee v. Mobilehome Park Rental Review Board, 17 Cal. App. 4th 1097 (1993) California Court of Appeals
Palomar Mobilehome Park v. City of San Marcos, 16 Cal.App.eth 481 (1993) California Court of Appeals
Kavanau v. Santa Monica Rent Control Board, 16 Cal.4th. 761 (1997) California Supreme Court); cert.
denied, 522 U.S. 1077,118 S.Ct. 856, 1391.Ed. ze, 755'(1998)
Quinn v, Rent Control Board of Peabody, 45 Mass. App.Ct, 357, 698 N.E.2d.911 (1998, Massachusetts
Court of Appeal)
Galland v. City of Clovis, 24 Cal. App. 41h1003, California Supreme Court (2001)
MHC Operating Limited Partnership v. City of San Jose, 106 Cal. App.4th {2003} California Court of
Appeal
Berger Foundation v. Escondido, 127 Cal.App.sth 1 (2005) California Court of Appeal
TG Oceanside, L.P. v. City of Oceanside, 156 Cal. App.4th 1355 (2007) California Court of Appeal
D-5

2011 Study of Economics of Mobilehomes - HCIDLA

Transcription

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