BILL ANALYSIS Ó
AB 2587
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Date of Hearing: April 30, 2014
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
AB 2587 (Hernandez) - As Introduced: February 21, 2014
SUBJECT : Mobilehome Parks: Rent Control.
SUMMARY : Authorizes the legislative body of a local government
to conduct a regional mobilehome park rent survey and limit the
base rent amount for mobilehome space rent agreements meeting
certain conditions. Specifically, this bill :
1)Authorizes local governments to conduct a regional mobilehome
park rent survey, after publishing a notice of preparation of
the survey in a newspaper of general circulation, and mailing
the notice by first-class mail to the management of each
rental mobilehome park in its jurisdiction.
2)Defines "regional mobilehome park rent survey" or "survey" as
a written survey of mobilehome park rent levels within a
geographically relevant market area that compares and
describes the rent levels in mobilehome parks within the 12
months preceding the publication of the notice of preparation.
3)Provides that a local government may publish a notice of
public hearing for considering the survey and hold the public
hearing at least 90 days following the notice of hearing.
4)Requires that a copy of the rent survey shall be available for
public inspection within 15 days of publication of the notice
of public hearing.
5)Authorizes a local government to consider, approve, or approve
with changes the information contained in the survey at the
public hearing, including the boundaries of the geographically
relevant market area.
6)Requires a local government, within 30 days following the
approval of the survey, to mail a notice of its approval of
the survey and the base rent amount to the management of each
rental mobilehome park within its jurisdiction.
7)Authorizes a local government to, within 12 months after the
approval of the survey, limit the base rent for the following
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types of mobilehome space rent agreements:
a) The rental of a mobilehome park space, whether
occupied by a manufactured home or not, if the rental
agreement is not extended and no new rental agreement in
excess of 12 months' duration is entered into.
b) The rental of a mobilehome space if the space is
vacant for a period of 30 days.
1)Provides that an interested person may seek judicial review of
the approved survey and the limited base rent amount.
EXISTING LAW:
1)Regulates, pursuant to the Mobilehome Residency Law (MRL), the
rights, responsibilities, obligations, and relationships
between mobilehome park management and park residents (Civil
Code Section 789, et seq.).
2)Specifies that a rental agreement in a mobilehome park in
excess of 12 months' duration and meeting certain conditions
that is entered into between the management and a homeowner
for the personal residence of the homeowner is exempt from any
ordinance, rule, regulation, or initiative measure adopted by
any local governmental entity that establishes a maximum
amount that a landlord may charge a tenant for rent (Civil
Code Section 798.17).
3)Provides that if a long-term lease expires and is not
extended, and no new rental agreement in excess of 12 month is
entered into, then the following occurs:
a) The space is no longer exempt from a rent control
ordinance, if any; and
b) The last rental rate charged for the space under the
previous lease shall be the base rent for purposes of any
applicable rent control law.
(Civil Code Section 798.17)
1)Exempts any mobilehome that is not the principal residence of
the homeowner and that has not been rented to another party
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from rent control. (Civil Code Section 798.21)
FISCAL EFFECT : None.
COMMENTS :
Background:
In the majority of mobilehome parks, residents own their homes
but rent the spaces on which their homes are installed.
"Mobilehome" is something of a misnomer in that once installed
in a park, it is very rare for a mobilehome to be moved. This
is due to both the difficulty and cost involved, and also
because the supply of mobilehome spaces is very limited,
vacancies are rare, and most park owners do not allow the
installation of older mobilehomes in their parks.
Over 100 jurisdictions in California have some form of local
rent control ordinance limiting the amount of rent or
establishing a maximum amount of rent that the management of a
mobilehome park may charge a tenant. Birkenfeld v. Berkeley
(1976) 17 Cal. 3d 129, provides that cities and counties have
within their policy and regulation powers the authority to enact
rent control laws so long as a fair return is assured to
property owners. Under existing law, local governmental
entities are free to enact rent control laws regarding
mobilehome parks. These local laws are not subject to the
state's Costa-Hawkins Act restricting permissible rent control
ordinances, but in certain circumstances the Mobilehome
Residency Law (MRL) exempts certain mobilehome park spaces from
local rent control. Under existing law, rental agreements which
are twelve months or longer are exempt from local rent control.
Purpose of the Bill:
According to the author, as mobilehome rent continues to
increase, renters may believe it is in their best interest to
enter into long-term leases for over 12 months. These leases
often have built in rental increases, which may end up costing
more than fair market value. AB 2587 would allow a local
government to conduct a regional base rent survey. After 90
days, the local government may consider, approve, or approve
with changes the information contained in the survey. The base
rent amount will apply to rental space that has been vacant for
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30 days or more, to rental space with lease agreements shorter
than 12 months, and to rental space where a rental agreement is
not extended. The author contends that renters will not feel
obligated to enter into long term leases for over 12 months if
the local government establishes a base rent limitation.
The author cites a specific example in the city of El Monte
involving a mobilehome park that has a history of exorbitant
rent increases while failing to maintain the grounds. The
author notes that the average annual household income for El
Monte residents living in non-mobilehomes is about $53,063. By
comparison, El Monte's mobilehome residents make about $33,958
annually, which is 64% of the average household income of
residents in non-mobilehomes. In the author's view, this bill
will ensure fair market values for mobilehome rental spaces.
Arguments in Support:
Supporters contend that AB 2587 will ensure fair market values
for mobilehome rental spaces by allowing a local government to
survey the relevant market area in order to determine a fair
base rental rate. Mobilehome parks are an important source of
affordable housing for many low-income households and senior
citizens. In supporters' view, as mobilehome space rent
continues to increase, renters may believe it is in their best
interest to enter into extended leases that are exempt from rent
control. Supporters contend that this bill will empower local
governments with rent stabilization to establish objectively
adequate base rent levels in accordance with current demographic
and economic data.
Arguments in Opposition:
Opponents argue that the bill will likely be declared
unconstitutional, as the base rent determination does not take
into consideration specific park attributes of the community or
ensure a fair rate of return. Opponents contend that, in
addressing one bad actor in El Monte, this bill will adversely
impact park owners throughout the state. In opponents' view,
there are already laws in place that may be used to enforce the
law against park owners who violate statutes or regulations, and
this bill is an overly broad remedy for an individualized
situation.
History:
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As noted above, this bill addresses a situation involving a
mobilehome park in the city of El Monte. In July 2012, after
hearing complaints of excessive rents from residents of this
park, the El Monte City Council passed a resolution calling a
special election in November 2012. At this election, voters
passed Measure F, which overturned a 1990 City ordinance that
prohibited the City from examining mobilehome rents or
implementing rent stabilization. On September 3, 2013, the City
of El Monte adopted Ordinance No. 2829, the Mobilehome Rent
Stabilization Ordinance.
There are two pending court cases involving the above-referenced
mobilehome park:
1)Cortez v. Brookside Investments, Ltd., Los Angeles Superior
Court case no. KC057251
This is a case by past and present residents against Brookside
Mobile Country Club in El Monte. There are several causes of
action, including nuisance for poor park maintenance, breach of
contract, negligence, intentional infliction of emotional
distress, breach of statutes/interference with property rights
for interfering with mobilehome sales, unlawful retaliation, and
illegal eviction. The complaint includes allegations that the
Plaintiff raised rents to unreasonable levels for residents who
were on month-to-month rental agreements, and only agreed to
reduce these rents if these residents agreed to sign long-term
leases which would be exempt from any future rent control. This
case was filed in November 2009 and is currently pending.
2)Brookside Investments, Ltd. v. City of El Monte Los Angeles
Superior Court case no. BC503836
This is a case brought by Brookside Mobile Country Club against
the City of El Monte to challenge the passage of Measure F in
2012, which overturned a 1990 City ordinance that prohibited
rent control. The passage of Measure F resulted in the
subsequent passage of Ordinance No. 2829 in 2013, which
established mobilehome rent control in the City of El Monte.
This case was filed in March 2013 and is currently pending.
There is an upcoming hearing on the Defendant's Motion for
Summary Judgment on June 6, 2014.
REGISTERED SUPPORT / OPPOSITION :
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Support
City of El Monte (sponsor)
California Alliance for Retired Americans
Opposition
Western Manufactured Housing Communities Association
California Association of Realtors
California Mobilehome Parkowners Alliance
Analysis Prepared by : Rebecca Rabovsky / H. & C.D. / (916)
319-2085