Bid to Increase Mobile Homes’ Rent Threatens Retiree Havens

LOS OSOS, Calif. —  Bill Spurrier and Wilma Hembree have been neighbors for 25 years in a San Luis Obispo County mobile home park with the requisite swimming pool, the once-modern community center and rows of neat coaches.

Cooler than San Luis Obispo and warmer than Morro Bay, the Sea Oaks Mobile Home Community is between the two communities at the base of the Irish Hills, where 70 degrees and sunny might be the standing weather forecast.

But Hembree, a legally blind 89-year-old widow, and Spurrier, a 77-year-old retired Long Beach firefighter, see storm clouds blowing over their haven in the form of a fight about rent control that looms over mobile home parks statewide.

The two senior citizens and seven other tenants in the 125-space park received notice this spring that the rent for their spaces would increase about 250% to $1,100. The dispute began with technical disagreements between the tenants and a Chicago-based corporation over the terms of their leases. The company has used similar disputes in other California communities as a starting point for challenging the constitutionality of rent control.

Many California communities maintain laws that limit rent increases, even when mobile homes are sold. That has frustrated many park owners, particularly because limits on apartment rents were eliminated in 1999. Landlords of mobile home parks have responded by increasing pressure to break through price restrictions.

Senior citizens such as those at Sea Oaks say it is unfair to hit them with large rent increases, which they say they can’t afford on fixed incomes. Many of the older tenants had planned to sell their units one day at a profit, something they may find difficult if rents go through the roof. That fear remains even though Hembree, at least, received a reprieve when the landlord promised to keep her rent at $295 a month.

“I don’t usually look this old,” Spurrier said at a recent gathering of senior citizens who are angry over the rent increases at Sea Oaks. “I’ve aged 10 years in the last three months.”

But Manufactured Home Communities--a publicly held real estate investment trust and the largest owner of mobile home parks in the nation--said it is only trying to protect its investment at Sea Oaks and other California parks.

The Chicago-based company argues that rent control robs its shareholders, many of whom are also of modest means, of the full value of the properties. The company says that many individual mobile home owners are wealthy speculators who sell relatively worthless mobile homes for exorbitant prices, up to $500,000--playing on buyers who will pay top dollar because they know their monthly payments will be kept artificially low by rent control.

The firm is in federal court in three separate cases challenging the constitutionality of mobile home rent control in the cities of San Luis Obispo, San Rafael and Santa Cruz. Both sides say it’s likely that the Sea Oaks park in Los Osos, an unincorporated area under the San Luis Obispo County ordinance, will soon be added to the list.

The company “makes a federal case out of everything,” said San Luis Obispo attorney John Belsher, who represents area mobile home owners.

But David Bradford, the Chicago-based attorney handling the company’s federal cases, said there is good reason. “The reason they are selling for that much is because they are selling rent control in perpetuity,” Bradford said. “The value of our land is being transferred to the tenants.”

Fearing that landlords are increasingly finding ways around rent control, scores of tenants have been lodging complaints with California legislators and asking for a statewide law controlling the rent on mobile homes. Experts say it’s unlikely the Legislature will intervene.

The company’s conflicts with its tenants often began with technical issues involving the local rent control laws, but expanded into tests of the underlying constitutionality of rent control ordinances:

* In Santa Cruz, residents of DeAnza Mobile Home Estates, an exquisite park on a coastal bluff overlooking Natural Bridges State Park, have been in litigation with the company for years over a series of issues.

The firm has increased rents to as high as $4,000 a month on a few mobile homes after individual coach owners received sales prices of up to $500,000.

Barbara Choi, a deputy city attorney for Santa Cruz, acknowledges that some former owners violated a sales price cap in the city’s rent control law--complicating the defense of the ordinance.

Although the company’s attorneys reiterated that they are protecting shareholder interests, Choi said the company is preying on municipalities that find it difficult to afford to defend themselves. Santa Cruz has spent $300,000 so far to defend its rent control ordinance, she said. “They have unlimited financial resources,” Choi said. “The ultimate goal is to eliminate rent control.”

* In San Luis Obispo, the company has charged that the city’s rent control on mobile homes is unconstitutional. The dispute originated when the company said one tenant had transferred tenancy to his daughter, and it imposed a rent increase from $430 to $1,100 a month. That case is pending in federal court in Los Angeles.

* In San Rafael, the company sued when the city moved to allow decontrol of rents at vacated units and then backed off after a public outcry from senior citizens. The company won a first round in court in a dispute involving the Contempo Marin Mobile Home Park and city officials are fighting to preserve their ordinance.

Back at Sea Oaks, fear is spreading among residents.

The tenants won a first round this month when the county rent control board rejected the increases, which raised rents for some tenants from about $300 a month to $1,100. The board hearing was packed with 250 audience members, many of whom booed and hissed the company’s attorney.

The company argued that rent increases were justified because the county’s rent control applies only to month-to-month tenancies and the renters had signed yearly leases.

Anthony Rodriguez told the rent board that most of the value of mobile home sales is due to the underlying land. He said that any value between the low blue book value of a mobile home--sometimes $20,000 for older double-wides--and the sale price rightly belongs to the company.

Spurrier lives with his wife in a double-wide. He had planned to go on living in Sea Oaks indefinitely. But he said he cannot afford to pay $1,100 a month.

Hembree, who lives in a smaller single-wide, was hoping to sell and move closer to the Braille Institute in Santa Barbara as she tries to maintain her independence despite rapidly diminishing eyesight.

The company has recently reversed the rent increase it once demanded from the woman, saying that she can keep her $295 monthly rent for the next 30 years. Company attorney Bradford said the firm tries to make such hardship exemptions.

But she still protests that her plans to sell her mobile home will be scotched because any buyer will offer less for the older home when facing a large monthly rent increase to occupy a space in the park.

“Now, it’s worth almost nothing because nobody wants to pay that kind of rent” said Hembree, who said she lives on $800 in Social Security a month. “I really don’t have any savings; it’s all tied up in my home.”

Company representatives said owners such as Hembree are the exception and that many affluent residents are making large gains by selling mobile homes.

With cases pending all over the state, legal experts said it will take a higher court decision, probably from the U.S. 9th Circuit Court of Appeals, to settle the disputes.

Cayetano Moreno, a soft-spoken owner of three small mobile home parks in Los Osos and Morro Bay, favors capping the sale price that individuals can receive for their mobile homes and keeping rent control.

“I have no problem with crucifying this large corporation,” Moreno said. “But we have to recognize they are not the only greedy ones. It is greedy to sell these mobile homes for a huge sum. The result is that there will be no affordable housing on the Central Coast.”