Fortuna Council Asked to Close ‘Loopholes’ in Rent Control Ordinance

[00:00:00] Speaker A: As an initial public comment period for a draft mobile home park rent control ordinance closes, Residents of a Fortuna mobile home park said loopholes need to be closed and caps on rent increases should be tightened. The Fortuna City Council got feedback on the draft ordinance at its Jan. 20 meeting. The city's move toward mobile home rent control is spurred by residents of the Royal Crest Mobile Home park in Fortuna. The park's tenants have described their rent increases as unfair and beyond the annual inflation rate. The draft ordinance caps increases to match the state's annual inflation rate, but exceptions are allowed for fair return on investment if park owners make capital improvements. A Royal Crest resident said these so called pass through expenses could be an avenue to rent hikes. [00:00:58] Speaker B: Too often these increases are just baked into park residents monthly invoices and the park owners bank on the park residents to forget about those increases forever pain on that increase. So not only does the park owner recoup those costs, they also benefit from the improvements when the park is sold and they continue to collect those increases year over year even after they've recouped their costs. So in the draft rso, instead of allowing this, we feel some measures to make it A stronger RSO is A park owner should have to get the approval of 75% of park owners prior to submission of a petition for any pass through expenses, whether capital or not. If the petition is passed, the process should include open books ensuring appropriate expenditures, ensuring they are not overcharging and or employing personal connections and the pass through charge should go away when the project is completed and the park owners have recouped those expenses. So essentially we're saying please don't shoot, you know yourselves in the foot by allowing gaping loopholes. [00:02:00] Speaker A: Another concern that mobile home park owners might raise lot rents upon sales of mobile homes was described by Royal Crest resident Jane Lutz. [00:02:10] Speaker C: The current draft of the rent stabilization ordinance does not have anything in it that protects park residents from the park owner increasing the lot rent when a home is sold or transferred. The problem with that is when a house is sold, the park owner can raise the rent for the lot in unlimited amounts, which makes it unaffordable, undermining the resale value of the home. The rule of thumb in the industry is that for every $100 the rent increases, the value of the home decreases by $10,000. The goal of an RSO is to stabilize affordability. Part of that is recognizing that if a potential buyer can go three miles north where the Humboldt County RSO applies and purchase the same home layout with a significant cheaper lot rent. Why wouldn't they? [00:03:17] Speaker A: The process for administrating fair return on investment applications was also questioned. The ordinance says a hearing officer designated by the City Manager will make a recommendation to the City Council. A Royal Crest resident said the decision should be made by a more independent party. [00:03:38] Speaker D: If the City Council can second guess or undermine a final decision, this means that the process is highly subject possible corruption. It also will potentially draw the process out for months. We are requesting the RSO alteration. Assign all fair return petitions to Administrative Law Judge Hearing Officer from California Office of Administrative Hearings where their decision was final determination in the matter and do not allow the City Council to make the final decision. My final thing is I worked for 50 years and every time a corporation came in and took us over, I lost my pension because they sold out at nine, nine and a half years. So now at the age of 73, I'm back to working because of another corporation coming in and jacking up the rents. It's not fair, it's not right. [00:04:42] Speaker A: Other Royal Crest residents said capping annual rent increases at the rate of inflation could be too costly to tenants in years of high inflation and there should be a process to prevent park owners from reducing services in retaliation for rent increase limits. A draft of the proposed ordinance is posted on the city's website and preliminary public comment on it will be taken until January 30. The comments will shape the draft, which will then go to the council for more comment and a final decision. For KMUD News, this is Daniel Mentz.