BILL ANALYSIS �
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
SB 1173 (Wyland)
As Amended March 26, 2012
Hearing Date: May 8, 2012
Fiscal: No
Urgency: No
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SUBJECT
Mobilehomes: Rent Control
DESCRIPTION
This bill would require a local agency that administers a rent
control ordinance to permit mobilehome park management to
separately charge a homeowner, as specified, for: (1) the pro
rata amount of any charge first imposed by a city, county, the
state or federal government on a parcel on or after January 1,
2013; and (2) the pro rata amount of any charge first imposed by
a state or locally mandated program relating to housing on a
parcel on or after January 1, 2013.
This bill would provide that nothing in the bill shall require
management to refund, reduce, or otherwise change any fee or
charge billed by management to a homeowner as of December 31,
2012.
BACKGROUND
Enacted in 1978, the Mobilehome Residency Law (MRL) governs the
relationship between park owners or managers and the residents
of the 4,800 plus mobilehome parks and manufactured housing
communities in California. In most of those parks, residents
own their home but lease the land on which their home is
installed. Although they have historically been called
"mobilehomes," it is very difficult to actually move a
mobilehome once it has been installed in a park.
To protect mobilehome park residents from rent increases on the
property underlying their home, over 100 jurisdictions in
(more)
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California have enacted some form of rent control. Those rent
control ordinances are a proper exercise of the local
government's police power if their provisions are "reasonably
calculated to eliminate excessive rents and at the same time
provide landlords with a just and reasonable return on their
property." (Birkenfeld v. Berkeley (1976) 17 Cal.3d 129, 165.)
Although mobilehome parks are not subject to the Costa-Hawkins
Rental Housing Act (which restricts the use of rent control in
other residential properties), the MRL does limit the
application of rent control in certain circumstances, including
if the lease agreement is greater than 12 months, or if the
mobilehome is not the owner's principal residence and is not
being rented to another party. The MRL additionally permits
mobilehome park owners to pass through the cost of new or
increased fees or charges imposed on a "space" by local
jurisdictions or by state or local mandated programs, as
specified. Those provisions were enacted by SB 1365 (Leslie,
Chapter 338, Statutes of 1992) and clarified by SB 1510 (Lewis,
Chapter 340, Statutes of 1994).
This bill would additionally allow park owners to pass through:
(1) the pro rata amount of any charge first imposed by a city,
county, the state, federal government, or voters on or after
January 1, 2013 on any parcel upon which the mobilehome park is
located, and any increase in that charge; and (2) the pro rata
amount any charge first imposed pursuant to any state or locally
mandated program relating to housing, as specified, and any
increase in that charge.
CHANGES TO EXISTING LAW
Existing law , the Mobilehome Residency Law, governs the
relationship between park owners or managers and the residents
in mobilehome parks and manufactured housing communities. (Civ.
Code Sec. 798 et seq.)
Existing law provides that a homeowner shall not be charged a
fee for other than rent, utilities, and incidental reasonable
charges for services actually rendered. (Civ. Code Sec.
798.31.)
Existing law provides that a local agency that administers an
ordinance, rule, regulation, or initiative measure that
establishes a maximum amount that management may charge a tenant
for rent shall permit the management to separately charge a
homeowner for the following:
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the amount of any fee, assessment, or other charge first
imposed by a city, county, the state, or the federal
government upon the space rented by the homeowner on or after
January 1, 1995;
the amount of any increase on or after January 1, 1995 in an
existing fee, assessment or other charge imposed by any
governmental entity upon the space rented by the homeowner;
and
the amount of any fee, assessment or other charge upon the
space first imposed or increased on or after January 1, 1993,
pursuant to any state or locally mandated program related to
housing, as specified. (Civ. Code Sec. 798.49.)
Existing law requires the amount of the above fees, assessments
or other charges to be separately stated on any billing to the
homeowner, as specified, and exempts specified fees and costs
from the above provision. (Civ. Code Sec. 798.49.)
This bill would additionally authorize management to separately
charge a homeowner for the following fees:
the pro rata amount, based on the total number of spaces in
the park, of any fee, assessment, or other charge first
imposed by a city, including a charter city, a county, a city
and county, the state, the federal government, or by voter
approval on or after January 1, 2013, on any parcel upon which
the mobilehome park is located, and any increase in that fee,
assessment or charge; and
the pro rata amount, based on the total number of spaces in
the park, of any fee, assessment, or other charge first
imposed pursuant to any state or locally mandated program
relating to housing, as specified, on or after January 1,
2013, on any parcel upon which the mobilehome park is located,
and any increase in that fee, assessment or charge.
This bill would further provide that nothing in the above
section shall require management to refund, reduce, or otherwise
change any fee or charge billed by management to a homeowner as
of December 31, 2012.
COMMENT
1. Stated need for the bill
According to the author:
Civil Code section 798.49 was enacted in 1992 by Senate Bill
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1365 (Leslie) (Chapter 338, Statutes 1992) and clarified by
Senate Bill 1510 (Lewis) (Chapter 340, Statutes 1994). The
legislative history shows that the parkowners (WMA) �Western
Manufactured Housing Communities Association] and the
residents (GSMOL) �Golden State Manufactured-home Owners
League, Inc.] worked together and, in the end, both
organizations supported SB 1365 (Leslie).
The example at the time, but still relevant today, has this
effect:
A rent may be set at $150.00 and is governed by the increase
in Consumer Price Index (CPI). The CPI increase for one
year is 4.5 �percent]. Thus, the park owner could increase
the rent by $6.75 as compensation for general cost-of-living
increases. However, the local jurisdiction then imposes a
per space or dwelling assessment of $6.60 per month for the
upgrading of the county landfill site. Since the parkowner
is prohibited under the rent control ordinance from
increasing his rents to reflect this government-mandated
cost, he is, in this example, only given 15 cents per month
increase. Yet, he is expected to maintain the property, pay
CPI rate, pay the additional costs of doing business which
rise at least at the CPI rate.
SB 1365 (Leslie) fixed this scenario when the fee or
assessment �was] done on a per "space" basis but was silent
if the same fee or assessment was made on the "parcel". . .
. SB 1173 (Wyland) proposes to clarify existing law and
allow "parcel" assessments to be passed through by
pro-rating the amount on a per space basis.
2. Overriding local rent control ordinances
Under existing law, mobilehome park owners are permitted to
"pass through" various fees imposed by a city, county, state, or
federal government on a "space" rented by the homeowner. As a
result, park owners are permitted to pass on to residents in
rent control jurisdictions these governmental fees and charges,
provided that the charge is separately stated. This bill seeks
to expand that authority by permitting park owners to pass on to
residents similar fees imposed on any "parcel" on which the
mobilehome park is located. As with existing law, this
allowance would preempt (override) any provision in a local rent
control ordinance that failed to make that allowance.
Essentially, this bill would allow owners to pass on these
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additional costs in jurisdictions that do not expressly allow
them to be passed on.
Opponents of this bill, the California Rural Legal Assistance
Foundation, Golden State Manufactured-home Owners League, Inc.,
and the Western Center on Law and Poverty, express concern that
this bill would unnecessarily override local rent control
ordinances, note that most local ordinances already provide a
means of passing through assessments, and assert that it is more
appropriate for the local jurisdiction to determine whether or
not a pass through is appropriate (and the percentage of any
pass through authorized). The author, in response, asserts
that:
WMA �Western Manufactured Housing Communities Association]
and its members have made efforts to educate government
officials on the most efficient process to pass-through fees
and assessments on a per space basis; however, there are too
many jurisdictions to educate as well as the turnover in
staff that regularly occurs. The "parcel" assessment or fee
can be easily divided by the number of spaces in the
community and be fairly applied to resident bills.
Thus, the policy question raised by this bill is whether or
not local rent control ordinances that do not allow for a pass
through of these fees (or permit only a percentage of the fees
to be passed through) should be preempted, thus, allowing the
entire fee to be collected from the residents of mobilehome
parks in those jurisdictions. Ordinances that already provide
for the pass through sought by this bill would arguably not be
affected because there would be no conflict with state law.
a. Local discretion
Rent control ordinances are enacted by local governments and
are arguably tailored to the specific needs of those
communities. As noted by the California Supreme Court, "�a]
local law conflicts with state law, and is therefore preempted
and invalid, if it 'duplicates . . ., contradicts . . ., or
enters an area fully occupied by general law, either expressly
or by legislative implication ?.'" (Cacho v. Boudreau (2007)
40 Cal.4th 341, 348). Thus, those tailored local ordinances
would be preempted to the extent that they conflict with this
bill's proposed pass through allowance. This preemption could
override a deliberate decision of the local governmental
entity to require the park owner to pay for specific fees due
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to concern about the ability for fixed-income residents to pay
those amounts, or, simply a policy choice that the fee should
be a cost of doing business for the owner.
Given that this bill would arguably only apply to local
ordinances that do not already permit the charges at issue to
be passed through, the Committee should consider whether it
would be appropriate to override those local ordinances
without compelling evidence of the need to usurp the authority
of those local governments.
b. Constitutional requirements that apply to local
ordinances
It is important to note that the charges at-issue in this bill
are those imposed on the park by either the city, county,
state, federal government, or the voters. Park owners would
arguably not make any additional money off of being able to
pass on those amounts, but those owners could avoid having to
pay fees that may be considered by some as a cost of doing
business.
It should also be noted that the California Supreme Court
has also held that "�t]o be constitutionally valid . . . a
rent control law must permit the landlord to earn a fair
return on investment and thereby not be confiscatory. ?
Typically, rent control laws contain a list of factors for
the regulator to consider in setting the maximum allowable
rent, including typical business costs." (Cacho v. Boudreau
(2007) 40 Cal.4th at 350-351.) Thus, local jurisdictions
must ensure that mobile home park owners in rent control
jurisdictions do earn a fair rate of return. This fair rate
of return must arguably factor in the amounts paid by a park
owner for charges that cannot be passed through under the
local ordinance, thus, the amount paid by the owner should
arguably already be considered by each local jurisdiction as
part of ensuring a fair return to the owner.
Considering the existing constitutional requirement for a
fair rate of return in these jurisdictions, the Committee
should consider whether it is, in fact, appropriate to
override a deliberate decision on the part of the local
government to either require the owner to pay the fee as a
cost of doing business, or to divide the fee between park
owners and residents.
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3. No refunds or change in fee or charge
This bill would also specify that nothing in the section
modified by this bill shall require the park management to
refund, reduce, or otherwise change any fee or charge billed
by management to homeowner as of December 31, 2012.
Considering that this bill acts to specifically allow the pass
through of charges, it is unclear under what circumstances SB
1173 could be construed to require a refund or reduction in a
fee or charge billed as of December 31, 2012 (prior to the
effective date of this bill).
Absent specified examples of circumstances that would require
such a refund, the provision should be stricken from the bill
to avoid any potential confusion about its impact, or any
unintended consequences. It should be noted, however, that
the striking of that provision would not address the above
issues regarding interference with local jurisdictions'
decisions regarding whether or not specific charges should be
passed on to residents.
Support : None Known
Opposition : California Rural Legal Assistance Foundation;
Golden State Manufactured-home Owners League, Inc.; Western
Center on Law and Poverty
HISTORY
Source : Western Manufactured Housing Communities Association
Related Pending Legislation : None Known
Prior Legislation :
SB 1510 (Lewis, Ch. 340, Stats. 1994) See Background; Comment 1.
SB 1365 (Leslie, Ch. 338, Stats. 1992) See Background; Comment
1.
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