HAC Minutes-2005-10-0532400 PASEO ADELANTO
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SAN JUAN CAPISTRANO. CA 92675
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MEMBERS OF THE CITY COUNCIL
SAM ALLEVATO
DIANE BATHGATE
WYATT HART
JOE SOT0
DAV'D M SWERDLIN
OCTOBER 5,2005
MINUTES OF THE SPECIAL MEETING OF THE
HOUSING ADVISORY COMMITTEE
OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA
The Meeting of the Housing Advisory Committee of the City of San Juan Capistrano,
California, was called to order by Chairperson Ratcliffe at 7:02 p.m. in the Council
Chambers.
ROLL CALL PRESENT: Gene Ratcliffe, Chairperson
Marie Buckner, Committee Member
Joann deGuevara, Committee Member
Joanne Marquez, Committee Member
David Nahas, Committee Member
ABSENT: None
STAFF PRESENT Omar Sandoval, Deputy City Attorney, and Elizabeth White,
Recording Secretary.
ORAL COMMUNICATIONS - None
ADMINISTRATIVE ITEMS
1. CAPISTRANO TERRACE MOBILE HOME PARK RENT INCREASE
APPLICATION DATED JUNE 14,2005 DENIED.
Omar Sandoval, Deputy City Attorney, summarized the staff report. The
Residents of Capistrano Terrace Mobile Home Park on June 14, 2004 petitioned
the City to review the Park Owners' notice of rent increase, which sought to
increase rent by $51.74 per space commencing on September 1 , 2004. The
Park Owners proposed to apply the increase incrementally upon the Residents,
at the anniversary date of each Resident's lease, to pass through increased
property tax and insurance costs. A majority of the Residents protested the
increase in writing, therefore, the City was required to conduct a hearing to
review the proposed increase.
Son Jiran Capistr-ano: Preserving the Past to Enhame the F'zitirrc -
Housing Advisory Committee Minutes
October 5,2005
Page 2
The hearing procedure required that a Hearing Officer be appointed to make a
recommendation on the matter. In addition to the Hearing Officer, a neutral
CPNFinancial Expert was hired to review the financial information produced at
the evidentiary hearings with respect to the “fair rate of return” analysis required
by the Rent Control Ordinance.
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summary, the Hearing Officer determined in her report that:
The City’s Rent Control Ordinance requires a fair rate of return analysis, and
that such analysis is a matter of expert opinion.
The neutral Financial Expert calculated the park’s rate of return at 6.271%,
which in his opinion was a fair rate of return.
Although the Park Owners documented increases in property taxes and
insurance costs, the Hearing Officer and Financial Expert concluded that
other booked expenses were discretionary expenses and not well
documented. The Hearing Officer and Financial Expert further determined
that such costs were not properly included in a “return on investment”
analysis. Accordingly, the Hearing Officer did not accept the Park Owners’
contention that they had sustained a substantial negative cash flow, or that
such a negative cash flow alone would support a rent increase under the Rent
Control 0 rd ina nce.
The park realized a fair rate of return.
The proposed rent increase is unfair and unjust.
Staff is recommending the Committee review the findings of the Hearing Officer
and any additional arguments of the parties and forward a recommendation to
City Council.
Chair Ratcliffe opened the public hearing.
Public Testimony:
Ray Poulter, 22974 El Tor0 Road, Lake Forest represented the Park Owners.
Mr. Poker felt that while the Hearing Officer was fair, the Rent Control Policy of
the City is unjust. He reported that the Park Owners took care to improve
management of the park and this involved higher costs. Had these costs been
taken into consideration, the “fair rate of return” would be lower. Mr. Poulter felt
that the Hearing Officer relied too heavily on the report of the Financial Expert.
The park owners are not fighting the city’s rent control policies. They are just
proceeding under the ordinance because they felt the rent increase was
warranted. He also relayed to the Committee that the owners are prepared to
repay the rent increase back to the residents if that is the final decision.
Marilla Hamor, Capistrano Mobile Home Park resident, expressed her agreement
with the City’s policies on rent control and the findings reported by the Hearing
Officer. She felt that the owners knew what property taxes they would be
responsible for when they bought the park and these costs should not be passed
Housing Advisory Committee Minutes
October 5,2005
Page 3
through to the residents. Ms. Hamor commented on the lack of management,
violations by the park owners, and unresolved issues in the park.
Vickie Talley, representing the Manufactured Housing Educational Trust, 25241
Paseo De Alicia Suite 120, Laguna Hills, disagreed with the findings of the
Hearing Officer and the City’s rent control policies. Ms. Talley reported that the
rate of return for the owners is not the norm for the industry. She feels that the
City should not be able to regulate the amount a business charges for its
services and that the City’s rent control policies are unjust.
Bill Palmer, Capistrano Mobile Home Park resident, agreed with the findings of
the Hearing Officer and the City’s policies on rent control. Mr. Palmer felt that the
return the park has received since it was purchased was exactly what was
expected. He also commented that the rent control policies were adopted by the
City many years ago and they have worked since then.
Stacy Hanson, Capistrano Mobile Home Park resident, agreed with the findings
of the Hearing Officer but questioned the information reported. Ms. Hanson felt
that many of the issues and relevant information she reported to the Hearing
Officer were not included in the record. She feels the Park Owners do not meet
the expectations of the residents.
Sally Garibaldi, Capistrano Mobile Home Park resident, thanked staff for all their
hard work and expressed her agreement with the findings of the Hearing Officer.
Ms. Garibaldi felt that the residents made an investment in affordable housing
and should be protected.
Harry Mallard, Capistrano Mobile Home Park resident, feels that there is a lot
less maintenance for the park owners than an apartment building and that the
residents incur more of their own home upkeep costs. Mr. Mallard agrees with
the rent control policies and supports the findings of the Hearing officer.
Martina Gregory, Capistrano Mobile Home Park resident, thanked staff for their
time and effort. Ms. Gregory loves the park and agrees with the rent control
policies and the findings of the Hearing Officer.
Chair Ratcliffe closed the public hearing.
Committee Discussion
The Committee members agreed that the fair rate of return reported by the
financial expert was adequate and fair, that the ordinance clearly defined the
instances in which rent increases are allowed, and the park owners should be
required to pay the excess rent back to the residents in a lump sum within 30
days of the Council’s adoption of the Hearing Officer’s findings.
Housing Advisory Committee Minutes
October 5,2005
Page 4
Committee Action: Moved by Committee Member Marquez, seconded by
Committee Member Buckner, and carried unanimously, 5-0, to forward to the City
Council a recommendation to find that the Hearing Officers conclusions are
correct and to direct the park owners to pay back the residents any excess rent
collected in a lump sum within 30 days of approval.
ADJOURNMENT
There being no further business before the Commission, Chair Ratcliffe adjourned the
meeting at 8:06 p.m.
Respectfully submitted,
Lyhette Adolphson, Secretary
APPROVED: March 22,2006
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