Of the five cities which comprise the 78 Corridor, only four of them have mobile home rent control measures on the books. Of the four (Escondido, San Marcos, Vista, and Oceanside), only Escondido has a rent control measure passed by voter initiative; the others have City Council ordinances which control the rents for their mobile home spaces.
In 1988, a mobile home park owner, Dr. John Yee – owner of Friendly Hills and Sunset Terrace Mobile Home Parks in Escondido – brought suit the very day after Proposition K, the Mobile Home Rent Control Initiative, was passed. In a stunning, unanimous (9-0) ruling, the U.S. Supreme Court found Escondido’s rent control measure to be constitutional.
The argument put forward by Yee and many other mobile home park owners over the years was rent control is a taking of their property and/or their profits under the constitution. The court found this was not the case, but this has not stopped park owners from filing lawsuits and trying to chip away at mobile rent control over the subsequent years.
There are two types of mobile home parks: rental parks and resident-owned parks. Rental parks are more common and are where owners of their homes lease, or rent, the ground underneath their home. Resident-owned parks are where the owner to own both the home and the land underneath. Mobile home rent control is only applicable to rental parks and is mostly a protective measure to keep costs low for the senior or lower-income population which reside in the parks.
Now, when a mobile home park owner wishes a rent increase, they are required to adhere to the processes which the four cities have in place to be granted a rent increase. The rent increases which are granted are usually on a percentage basis (e.g. the City of Escondido grants up to 75% of the change in the San Diego CPI on a short form rent increase request), though there are instances where a park owner might ask for a larger increase.
It is important to note the difference between mobile home rent control and apartment rent control. Mobile homes are purchased and are the property of the owner. The owners of mobile homes pay property taxes on an annual basis and can, if the circumstances are right, accrue equity in their homes. Apartments are not purchased and, by their design, intended to be transient in nature – people renting apartments to start their lives, save money to purchase a home, etc. Though it should be clarified, in today’s economy, the transient nature of an apartment is not as defined.
Mobile home rent control allows for a fair and equitable process for rent increases to take place. After all, on its most basic level, the park owner collects a monthly stipend for the ground underneath the mobile home. While there are various amenities which can be found at different mobile home parks (club houses, laundry facilities, pools, outdoor activities, etc.), these are not the sole responsibility of the homeowners to fund. After all, the amenities exist for the enjoyment of the residents, not as a capital investment by the park owner.
Many park owners will spend to improve the infrastructure of their properties (expand the club house, heat the pool, etc.) and expect this to be a proper justification for a rent increase when the proper maintenance and care of the facilities is required by law and any expansion of these facilities – if they wish to have residents share the expenses – should be discussed with the residents prior to construction or upgrade and is also required by law.
Of course, the park owners wish to collect as much money as they possibly can for what they believe their properties are worth. If they are unable to collect through rent increases, they have been known to find increases in other areas of park management. For example, park owners have been known to charge for the use of the park’s amenities (which is against the law), park owners have been known to charge for park infrastructure repair and/or installation (namely driveways and tree removal/trimming), and park owners have been very adept at corrupting the sale process of mobile homes in their park to take advantage of outgoing residents.
Take for example the two mobile home parks mentioned earlier owned by Dr. John Yee. Sunset Terrace and Friendly Hills sit adjacent and, combined, have approximately 230 spaces. Of those approximately 230 spaces, 4 homes are currently owned by residents, the rest are owned by Dr. Yee. For a number of years, Dr. Yee has used questionable tactics to run the resident owners out of the two mobile home parks and has benefited from doing so.
The first step in the process of running residents out of the park is lack of maintenance. Dr Yee has allowed the streets of the two parks to deteriorate and become pot-holed and dangerous. The City is required to inspect mobile home parks at the time of rent increase request and Dr. Yee, for a number of years, did not request a rent increase, so, consequently, he has not been inspected.
Second, in a bizarre twist of financial affairs, mobile homeowners are not allowed to sell their homes to a perspective buyer without the consent of the mobile home park owners who can create any set of circumstances they wish for the perspective buyers to meet. There have been instances where the park owners require four to six months of rent on deposit; some have required FICO scores of 800 or better; others require long-term leases to be signed (which are not covered under rent control) and build in double-digit, annual rent increase percentages. Some parks which do not have to worry about regulations controlling the increase in new rents (vacancy control), raise the incoming rent to an astronomical figure. All of these are designed to do one thing: trap the current homeowner in their home.
Once the homeowner reaches a point where they cannot afford, or are unwilling to fight for their home any longer, Dr. Yee would offer to “help the owner out” and purchase the home for $1000 or $2000, well below the market value of the home, depriving the home owner of all the equity they may have accrued, and then – especially in Dr. Yee’s case – renting the home out as the new owner. This allows Dr. Yee to rent the home to someone without rent control being applicable to the mobile home because the resident is a tenant, not an owner.
Dr. Yee has long been the example most park owners follow in the area. More and more, park owners are beginning to use the same tactics in their parks to buy out frustrated and despondent homeowners and then take advantage of the rental income unhindered by local rent control ordinances because the new residents are not homeowners.
The circumstances in which the mobile home owner find themselves can, often times, be harsh. The justices of both the U.S. Supreme Court and the Ninth Circuit Court of Appeals identified this unique and often tenuous position. Justice Sandra Day O’Connor, writing the opinion for the US Supreme Court in the Yee v City of Escondido case, stated, “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, only about 1 in every 100 mobile homes is ever moved.” And Justice Kleinfeld wrote, in the Guggenheim v City of Goleta case decided in 2010, “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.”
In my next article, I will explain the relationship between rent and equity in a mobile home and how that factors into affordability.