Hold on mobile home park rent increase up for decision

Hold on mobile home park rent increase up for decision
El Camino 76 Mobile Estates space rents are priced at $410.97 a month. The city showed the owner receives a positive cash flow return of $280 per space per month. The park owner claims he is not receiving a fair return on investment. Photo by Promise Yee

OCEANSIDE — The good news that El Camino 76 Mobile Estates mobile home owners heard in July is expected to be affirmed Feb. 7, when a judge will decide whether to uphold the commission decision for no rent increase on park spaces.

The Manufactured Homes Fair Practices Commission voted 3-2 in July to grant no rent increase to the mobile home park owner, who requested an increase of $148.56 a month per space.

The 80-space, all-ages mobile home park is described as being in average condition and of average quality.

The applicant claims he was not receiving a fair return on investment and proposed a $148.56 a month increase be collected through a $37.42 permanent rent increase, $102.11 capital improvement increase for five years, $4.65 street and pool restoration increase for 10 years, and $4.35 clubhouse and workshop roof restoration increase for 20 years.

The park owner also request $120,000 for fees and costs incurred in preparing the application.

The most recent rent adjustment for the park was a permissive space rent adjustment of 1.20 percent that was granted in 2013. The adjustment raised monthly rents from $410.97 to $439.22.

For the pending case both the city and park owner hired Member of the Appraisal Institute, or MAI, appraisers to look into whether the owner was receiving a reasonable return on investment.

Each side came to a different conclusion.

The city determined net operating costs at $207,704 and used a 40 percent index adjustment of net operating income at 15.3 percent to determine a monthly increase of $7.85.

The park owner determined lower net operating costs at $152,314 and used a higher 100 percent index adjustment of net operating income at 38.4 percent to determine a $110.28 monthly increase.

There was also a disagreement on the price of comparable rents with the city determining $425 a month as an average and the park owner citing $560 a month.

The city also showed that the park owner had a 2011 positive cash flow return of $280 per space per month, which is above 40 percent of the consumer price index.

“The majority of the commission went with experts’ recommendations and zero rent increase,” Angie Hanifin, city housing program manager, said.

The commission is comprised of appointed volunteers who do not own a mobile home park or mobile home.

Commissioner Mary Lou Elliott said she toured the mobile home park, listened to both presentations and voted in favor of no rent increase.

“I didn’t agree with the argument for the increase,” Elliott said. “I knew that I had to vote in good conscience. There were big presentations from both attorneys.”

George McNeil, commission chair, cast one of the two no votes. He said he saw justification for a small rent increase, in the amount of $7.85 initially recommended by the city.

“Three members’ views were that no increase was necessary,” McNeil said. “Two of us saw an increase could be granted. It’s a matter of judgment.”

“It was a complicated presentation.

“The decision making process is simple. We review the criteria and make a recommendation.”

A judge will review presentations from both sides at the February appeal hearing, which will be held in City Council chambers.

It is expected the same information will be presented and the judge will uphold the commission’s decision.

The outcome is not guaranteed and both sides can appeal the judge’s decision.



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