OCEANSIDE — The owner of El Camino 76 mobile home park has asked for a $148.56 space rent increase for mobile home owners.
The Manufactured Homes Fair Practices Commission denied the increase in July and now an appeal hearing officer will decide whether to uphold the decision or allow an increase.
Appeal hearing testimony was heard on Feb. 7.
“It’s not your run of the mill case,” The Hon. Herbert Hoffman, hearing officer, said. “It’s based on expert-oriented economics. I’ll do my best to try to make the best decision I can.
“It’s not black and white.”
Fritz Newman, the park owner, claims the increase is needed to cover a hardship adjustment, specifically $277,000 in legal fees incurred by a park tenant, the Ramos family, taking the owner to court over the issue of not being allowed to keep an 8-foot trampoline.
The trampoline extended into a common area and was considered a safety hazard, which the park owner could not secure insurance to cover. The Ramos family was told the trampoline was not allowed.
The Ramos’ brought the matter to court because they said they felt the owner disrespected them when he ordered the trampoline for their autistic son be removed.
“Maybe this lawsuit was the cost of doing business,” Hoffman said. “They recorded $277,000 as an overriding expense. That’s a huge expense unless the owner is lining his pockets with rents.”
Additional complexities surround the request for the rent increase.
Figures from both sides are different in the park’s rate of return, and percentage used in the index adjustment of net operating income.
There was also a difference in how many park spaces were considered.
The park has 23 park owner owned mobile homes, and 14 leased spaces. Both types of spaces are not covered under city rent control laws.
Another 44 mobile home spaces are rented month to month to mobile home owners and are protected under the rent control laws.
Newman figures solely the month-to-month space renters, who fall under the city rent control law, should absorb the hardship adjustment.
The city, which is defending rent control laws, sees the park as a whole and believes costs should be divided among all park residents.
“They used all expense they better use all income,” Rochelle Browne, outside special council for staff, said.
There is also disagreement over how much the park owner is making and whether the owner can absorb the $277,000 legal cost.
Michael St. John, an expert witness for the park owner, said the park is earning a 4.5 percent return a year.
Jim Gibson, an expert witness for the city, says the owner is making money “hand over fist.”
Gibson said the purchase price of the park that was bought 23 years ago has been paid, and the park rakes in money from rentals and leases. The park has also seen an appreciation.
He said the park earned an average 14 percent return a year from 2009 to 2011.
“If the park is actually earning 14 to 11 percent there is no need for a rent increase,” Hoffman said.
The attorney for the park owner asked Hoffman to grant a rent increase of approximately $100 a month for five years and then a permanent increase of $35.
“The owner is considering his tenants for a very large unusual expense,” attorney Terry Dowdall said.
Hoffman said a $100 a month rent increase would be a shock for renters who pay $400 to $450 for space rents.
“I don’t think anyone would say that’s appropriate,” Hoffman said.
Dowdall said to lessen the sticker shock the increase could be amortized in $25 yearly increments.
Frank Crowley, park resident, requested that Hoffman uphold the commission decision to grant no increase.
“I think a zero percent increase is a fair decision,” Crowley said.
He added that the Ramos family had ample reason to sue the park owner.
“Fritz Newman use to be a friend, now greed has taken over,” Crowley said.
If a rent increase is granted all future increases, including allowable yearly increases, will be based on the amount.
Hoffman said he would consider all testimony, as well as additional briefs and responses by the attorneys, and mail a written decision to both parities within 21 days.