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HomeMy WebLinkAboutSS7 - Correspondence - Mobile Home Rent Control OrdinanceYD STUDY SESSION NO.7 OFFICE OF THE CITY ATTORNEY MEMORANDUM January 19, 1982 To: Honorable Mayor & Members of the City Council From: Robert-H. Burnham - Assistant City Attorney Subject: Mobile Home Rent Control Ordinance This office, at the direction of the City Council, has reviewed the Mobile Home Rent Control Ordinances adopted by Westminster and San Juan Capistrano, and documents filed in conjunction with legal challenges to those Ordinances. We have also reviewed cases on the subject of rent control, and examined the Residential Rent Control Ordinances of Santa Monica and the City of Berkeley. DISCUSSION The function of this memo is to briefly advise the City Council of the basic steps that should be followed prior to the enactment of such an Ordinance and, briefly, analyze the legal and practical problems of Rent Control. The imposition of Rent Controls on residential property is within the police power of a City. Berkenfeld v. City of Berkeley (1976) 17 C3d 129. Prior to imposing such controls, a Municipality must: A. Conduct a study to determine whether (1) A housing shortage actually exists and (2) The shortage presents "concomitant ill effects of sufficient seriousness to make rent control a rational curative measure." Berkenfeld, supra, at page 160; and January 19, 1982 Page Two Subject: Mobile Home Rent Control Ordinance B. Prepare adequate environmental documentation with the likelihood that the City would have to prepare an EIR. C. Draft an Ordinance, with legislative findings, that is "reasonably calculated" to eliminate excessive rents and, at the same time, provide landlords with a just and reasonable return on their property." Further, the Ordinance must contain procedural safeguards. D. Hold public hearings. The practical problems stem from the need to ensure that the property owners obtain a reasonable return on their property and the need to resolve disputes. One approach to these problems is the creation of a Rent Control Board, with the power to adjust rents, without unreasonable delay, and resolve disputes concerning rent increases and retaliatory evictions. This approach, to be successful, requires a commitment, on the part of the City, to appoint and compensate, a number of qualified citizens, to serve on such a board, and, to provide the board members with adequate City support staff. Another approach, typified by the Westminster Ordinance, is to create a procedure whereby the property owner is required to arbitrate rent increases with property owners. This type of Ordinance, while less costly to enforce, is more susceptible to legal challenges. The legal challenges to Mobile Home Rent Control Ordinances have been premised upon two main arguments: First, it has been argued that State laws (specifically Civil Code Section 798 et seq., the Mobile Home Residency Law) preempts local regulation of Mobile Home rents. Second, the property owners have claimed that specific Ordinances have deprived them of property without due process of law. Based upon the experience of other cities, if an Ordinance is adopted by the City of Newport Beach it can be expected to be the subject of litigation. January 19, 1982 Page Three Subject: Mobile Home Rent Control Ordinance CONCLUSION It may be desirable to defer any serious consideration of the adoption of a Rent Control Ordinance until such time as legal challenges to other such Ordinances have been concluded. This office will be prepared to answer questions during the discussion of this item. RHB/pr Concomitant with the legal requirements to help assure that any rent control measure is sustainable if tested in Court, as discussed above, are related staffing enforcement costs that would be incurred by the City. These can be substantial and would have to be carefully evaluated. it Michael H. Miller MHM/pr f8 OFFICE OF THE CITY ATTORNEY MEMORANDUM STUDY SESSION ITEM NO. 10 February 3, 1982 To: Honorable Mayor & Members of the City Council From: Robert H. Burnham - Assistant City Attorney Subject: Moratorium on Mobilehome Rent Increases BACKGROUND The City Council, on January 25, 1982, directed this office to ascertain if there were any legal problems, should the City Council wish to adopt a temporary moratorium, or freeze, on mobilehome rent increases. DISCUSSION Moratoriums are generally implemented by way of an emergency ordinance, of limited duration, adopted to preserve the status quo, pending the enactment of permanent curative measures. The emergency ordinance process is used -so as to reduce the time available to those who would take action inconsistent with the intent of the moratorium and subsequent permanent measures. Our research has disclosed no reported decision that is consider- ed an action by a municipality imposing a moratorium on rental increases relating to mobilehomes. In reaching the conclusion expressed below, we have analyzed existing law relating to emer- gency measures, moratoriums in general, and recent case law on the subject of rent control. '9 February 3, 1982 Page Two Subject: Moratorium on Mobilehome Rent Increases In the event that the City Council wishes to take immediate ac- tion, it is empowered, by virtue of the provisions of our Charter, to enact emergency or urgency ordinances for the imm- ediate preservation of the public peace, health or safety. The ordinance must contain: "a statement of the reasons for its urgency" and "may be introduced and adopted at one and the same meeting if passed by at least five affirmative votes." Because of the subject matter that is being regulated, we would urge the Council to authorize, at least, a study to determine whether there are facts sufficient to constitute an immediate threat, rather than relying on the general rule that the courts will assume that the legislative body acted on sufficient inquiry as long as there is no evidence to the contrary. We make this recommendation due to the holding in Birkenfeld v. City of Berkeley (1976) 17 CA 3d 129, to the effect that rent control ordinances are appropriate only upon a finding by the legislative body that "serious housing problems" exist. In Birkenfeld, supra, for instance, the court found an adequate showing of a serious housing problem where the apartment vacancy rate was 3.1%; a large number of tenants were paying more than 35% of their income for rent, and minorities, students, elderly and low- income people had a particularly difficult time finding afford- able housing. Birkenfeld, supra, at p. 161. In summary, while the study that need be undertaken prior to the adoption of an emergency ordinance need not be as exhaustive as one conducted prior to the adoption of a permanent ordinance, there should be some attempt to ascertain the facts which would support a determination that there is an immediate threat. As indicated above, a moratorium ordinance is generally considered to be of limited duration and designed to preserve the status quo, pending the adoption of a permanent measure. The only specific authorization for the adoption of a moratorium ordinance is found in Section 65858 of the Government Code. That statute authorizes a general -law City to adopt a zoning moratorium ordin- ance upon a 4/5ths vote of the legislative body and eliminates the need to comply with the customary notice requirements. As Council may recall, this procedure was utilized in conjunction with the adoption of adult entertainment regulations. The enactment of a moratorium on rent increases presents some unique problems. As noted in previous memos, rent control ordin- ances have been upheld only when the ordinance accords the property owner a substantial economic return on his property. A moratorium on rent increases may, under certain circumstances, February 3, 1982 Page Three C Subject: Moratorium on Mobilehome Rent Increases not allow a property owner such a return, and under those circum- stances, would violate the due process provisions of the State and Federal Constitution. A control moratorium, while similar to a moratorium enacted in the context of a zoning ordinance, differs in one important aspect. Zoning ordinances are invalid unless they allow a pro- perty owner a substantial economic use and, thus, the preserva- tion of the status quo; in the context of zoning, it acts to preserve, at least, a substantial economic use. An individual who pays a large sum of money for a mobilehome park with an existing low -rental structure could, conceivably, not be allowed that substantial economic use, should rent increases be prohibited. Thus, a moratorium on rental increases relative to mobilehome properties, would be more susceptible to legal attack than a permanent rent control ordinance which contained provisions for reasonable rental increases. In our previous memo on rent control, we indicated that prior to the adoption of any rent control ordinance, some environmental documentation, possibly an EIR, would be required. While there is a statutory exemption for emergency projects, (Section 15071 (EIR Guidelines), we are not convinced that this statutory exemp- tion would apply to a moratorium ordinance which prohibited rent- al increases with respect to mobilehomes. However, due to the temporary nature of a moratorium, it is likely that the environ- mental coordinator, after conducting an initial study, would determine that no significant environmental impact would flow from the adoption of such an ordinance, and the City could, thus, proceed on the basis of a negative declaration. There is one final bit of information that may be of assistance to the Council in determining whether to adopt an emergency/moratorium ordinance, imposing a prohibition against rental increases with regard to mobilehomes. State law requires a property owner to give a mobilehome tenant written notice of any increase in rent, at least 60 days, before the date of the increase. (Civil Code Section 798.30) Thus, there is at least a two -month period that would be available to the City Council to consider the adoption of a permanent mobilehome rent control ordinance, without fear of a precipitous increase in mobilehome rents during the interim. February 3, 1982 Page Four Subject: Moratorium on Mobilehome Rent Increases CONCLUSION Given the protection afforded by State law and the problems related to affording the property owner a reasonable return on his property, in the context of a moratorium ordinance, it is the conclusion of this office that an emergency or moratorium ordin- ance on rental increases does not avoid any of the legal or prac- tical problems associated with permanent rent control ordinances. In fact, a moratorium ordinance on the subject of rent control may be more susceptible to legal attack than a per- manent ordinance which provides for reasonable rental increases upon a proper showing by a property owner. Concur. Mibhael'H. Miller City Attorney c RHB/pr 2K-Mobile bert H ' $urnham Assistant City Attorney