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05-0201_CC_Minutes_Regular MeetingMINUTES FEBRUARY 1, 2005 SAN JUAN CAPISTRANO CITY COUNCIL REGULAR MEETING CLOSED SESSION (610.85) - None Mayor Hart called the regular meeting of the City Council of the City of San Juan Capistrano to order at 7:01 p.m. in the City Council Chamber. Council Member Allevato led the Pledge of Allegiance and Mayor pro tem Swerdlin gave the invocation. ROLL CALL COUNCIL MEMBERS PRESENT: Sam Allevato, Diane Bathgate, Joe Soto, Mayor pro tem David M. Swerdiin, and Mayor Wyatt Hart. COUNCIL MEMBERS ABSENT: None STAFF PRESENT: David Adams, City Manager, William M. Huber, Assistant City Manager; Cynthia L. Russell, Administrative Services Director; John Shaw, City Attorney; Meg Monahan, City Clerk; Nasser Abbaszadeh, Engineering and Building Director; Karen Crocker, Community Services Manager; and Eileen White, Recording Secretary. ANNOUNCEMENT OF CLOSED SESSION ACTIONS - None CITY COUNCIL COMMENTS AND ORAL REPORTS Council Member Soto reported a recent meeting of the Mayor's Library Addition Subcommittee and library representatives. Mayor pro tem Swerdlin reported concerns of the Orange County Vector Control Board that the seasonal heavy rains will increase impacts of West Nile Virus; provided preventive measures to avoid contracting the Virus; and invited all to attend the CARE Car Show scheduled for Saturday morning. ANNOUNCEMENTS OF COMMUNITYWIDE INTEREST Karen Crocker, Community Services Manager, announced upcoming events including a Chamber of Commerce networking breakfast and the CARE Car Show, scheduled for February 8, 2005, starting at 8:00 a.m. INTRODUCTIONS, PRESENTATIONS, AND DONATIONS 1. PROCLAMATION DECLARING FEBRUARY 4, 2005 AS "GO RED FOR WOMEN" DAY (610.40) 2-1-2005 Mayor Hart presented a proclamation to Pat Wolfram, Board Member of the American Heart Association, proclaiming February 4, 2005 as "Go Red for Women" day. 2. INTRODUCTION OF COMMISSIONERS PRESENT AT MEETING (110.10) Mayor pro tem Swerdlin introduced the following individuals in attendance: Bob Cardoza and Gene Ratcliffe, Planning Commission; Joann de Guevara, Housing Advisory Committee; Teri Garza, Librarian, San Juan Capistrano Library; Carolyn Nash, former Mayor. ORAL COMMUNICATIONS - None CONSENT CALENDAR Council Action: Moved by Council Member Bathgate seconded by Council Member Soto and carried unanimously, 5-0, to approve items 1 through 9 as recommended by staff. ACCOUNTS PAYABLE WARRANTS DATED JANUARY 20, 2005, IN THE AMOUNT OF $1,129,020.46; AND PAYROLL WARRANTS DATED JANUARY 14, 2005, IN THE AMOUNT OF $289,435.18, RECEIVED AND FILED. (300.30) 2. STATUS REPORT ON CITY HALL RELOCATION SITE RECEIVED AND FILED. (200.30) 3. PLANS AND SPECIFICATIONS FOR THE MAJOR SEWER REPAIRS CAPITAL IMPROVEMENT PROJECT NO. 728 APPROVED; AND STAFF AUTHORIZED TO RECEIVE BIDS. (600.30) 4. RESOLUTION NO. 05-02-01-01, ENTITLED "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA, APPROVING THE SUBMITTAL OF TWELVE IMPROVEMENT PROJECTS TO THE ORANGE COUNTY TRANSPORTATION AUTHORITY FOR FUNDING UNDER THE COMBINED TRANSPORTATION FUNDING PROGRAM," ADOPTED, APPROVING SUBMITTAL OF THE FOLLOWING PROJECTS FOR FUNDING: DEL OBISPO STREET CIRCULATION IMPROVEMENT AND BRIDGE WIDENING OVER TRABUCO CREEK, ALIPAZ STREET TO LOS RIOS STREET (MPAH); DEL OBISPO STREET/CAMINO CAPISTRANO INTERSECTION IMPROVEMENTS (11P); JUNIPERO SERRA ROAD/RANCHO VIEJO ROAD INTERSECTION IMPROVEMENTS (IIP); RANCHO VIEJO ROAD/PASEO ESPADA TRAFFIC SIGNAL (SIP); LA NOVIA AVENUE BRIDGE WIDENING (MPAH); CAMINO CAPISTRANO LA ZANJA STREET LEFT TURN PHASING (SIP); JUNIPERO SERRA ROAD REHABILITATION, CAMINO CAPISTRANO TO I-5 SOUTHBOUND RAMPS (AHRP); DEL OBISPO STREET REHABILITATION, ORTEGA HIGHWAY TO CAMINO CAPISTRANO (AHRP); 2 2-1-2005 DEL OBISPO STREET REHABILITATION, ALIPAZ STREET TO AGUACATE ROAD (AHRP); DEL OBISPO STREET REHABILITATION, AGUACATE ROAD TO PASEO DE LA PAZ (AHRP); DEL OBISPO STREET REHABILITATION, PASEO DE LA PAZ TO 1000 FEET NORTH OF BLUE FIN DRIVE (AHRP); AND RANCHO VIEJO ROAD ADDITIONAL- NORTHBOUND LEFT TURN LANE AT ORTEGA HIGHWAY (IIP). (820.25) 5. LIBRARY BUDGET PROPOSAL AND REPAIR STRATEGY FOR THE SAN JUAN CAPISTRANO LIBRARY APPROVED. (CIP NO. 454) (230.30) 6. SUBROGATION CLAIM OF UNIVERSAL UNDERWRITERS GROUP (WESELOH CHEVROLET) DENIED, BASED UPON THE INVESTIGATION AND RECOMMENDATION OF THE CITY'S INSURANCE ADJUSTER, CARL WARREN & COMPANY. (170.70) 7. REPORT OF INVESTMENTS, MONTH ENDING DECEMBER 31, 2004 RECEIVED AND FILED; AND THE CITY CLERK DIRECTED TO FORWARD THE REPORT OF INVESTMENTS TO THE CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION. (350.30) 8. CASH BALANCES BY FUND, DECEMBER 31, 2004, RECEIVED AND FILED. (330.50) 9. PROCLAMATION OF A LOCAL EMERGENCY DECLARED ON JANUARY 11, 2005, CONTINUED. (520.10) PUBLIC HEARINGS - None RECESS AND RECONVENE Council recessed at 7:10 p.m. to convene to the San Juan Capistrano Community Redevelopment Agency meeting and reconvened at 7:11 p.m. ADMINISTRATIVE ITEMS - None ORDINANCES - None COUNCILMANIC ITEMS 1. PROPOSED RENT INCREASE FOR SAN JUAN MOBILE ESTATES MOBILE HOME PARK DENIED (430.70) Description: The property owners of San Juan Mobile Estates Mobile Home Park requested rent increase adjustments for three spaces within the park that exceed the maximum allowable rent increase permitted under the City's rent control regulations as set forth in Municipal Code Section 2-2.903. In accordance 3 2-1-2005 with the rent review hearing process, the City Council appointed Hearing Officer Michael Lowy to conduct hearings to determine if the proposed increase is fair and reasonable. Following the hearings, Hearing Officer Lowy submitted an opinion recommending that the City Council reject the requested rent increase for the following reasons: 1) The evidence did not establish that the City's rent control regulations are responsible for leading to a so-called premium to be paid by coach purchasers; 2) The weight of the evidence did not show that the park owner is receiving below market space rents; 3) The level of the rent increase requested by the park owner, if granted, would jeopardize whatever investment the coach owner made in the coach; 4) Expert testimony established that the park owner has enjoyed a 14% rate of return annually when adjusted for inflation, and that this return is a fair rate of return as prescribed in the rent regulations; and 5) California case law supports the application for rent control criteria of the type stated in the City's regulations. Further it is not clear that federal takings law necessarily would deem a denial of this rent increase to be an unconstitutional taking of private property. Hearing Officer Lowy's opinion was reviewed by the Housing Advisory Committee on January 13, 2005, and unanimously accepted. Staff recommended Council review and determine whether to accept and approve the findings and conclusions of Hearing Officer Michael Lowy in this matter. Written Communications: Report dated February 1, 2005, by John R. Shaw, City Attorney. Presentations: John R. Shaw, City Attorney, summarized the staff report. He corrected an omission on Page 3, paragraph 9 (item 2) of the staff report by inserting the word "below" after "park owner is receiving." Park Owner Representatives: C. William Dahlin, Attorney at Law, Hart, King, and Coldren Law Office, 200 E. Sandpointe, Santa Ana, representing San Juan Mobile Estates Mobile Home Park, recounted recent sales in the park, where coaches have been sold for far more than their value due to rent control, which he attributed to the capitalized value of the below market plus the value of the coach. He felt the entire hearing process excessive by nature, with procedural hurdles that increase costs and prolong the process. He felt the hearing officer was biased. Dahlin requested to submit a one page matrix into evidence. Keith Casenhiser, Walnut resident, 661 Brea Canyon Road, Walnut, managing agent for San Juan Mobile Estates Mobile Home Park, supported the comments raised by C. William Dahlin. He advised that the park owner would like to improve the property with new homes, but cannot because the rent increase would limit that investment by maintaining rent increases consistent with 4 2-1-2005 Consumer Price Index. The rent control ordinance has also caused a $400+ difference in rents of similar units. Representing San Juan Mobile Estates park residents association James M. Trush, Attorney at Law, Trush Law Office, 1920 Main Street, Ste 900, Irvine, summarized the testimony from the park owners' experts, which he opined failed to prove that the premiums are caused by rent control. The park owner did not offer any proof that the rents currently charged are below market, nor produce evidence indicating that the rate of return he is currently earning is not a fair return on his investment. He asked Council to adopt the findings and recommendation submitted by Hearing Officer Lowy. Mr. Trush requested to submit a letter from his office dated January 31, 2005. Public Comment: Don Miller, San Juan Mobile Estates Mobile Home Park resident, supported denial of the rent increase due to the 31% (before leveraging) rate of return earned by the park owners, which he considers more than fair. Brian Boulton, San Juan Mobile Estates Mobile Home Park resident, supported denial of the rent increase because it would be difficult for him to recoup the investment he has made in his mobile home if the increase is allowed. Irene Ryan, San Juan Mobile Estates Mobile Home Park resident, supported denial of the rent increase. She rents a mobile home owned by the park owners and has recently received notice of a rent increase of $400, which is more than allowed in the rent control ordinance. Susan Hartweg, San Juan Mobile Estates Mobile Home Park resident, supported denial of the rent increase. The previous owner invested over $50,000 in materials and labor into the mobile home and space and she has further improved the site. She values the ability to live in a beautiful community at a reduced rate and believes the park adds value to the community in return. Debra Shuler, San Juan Mobile Estates Mobile Home Park resident, supported denial of the rent increase because she lives on a fixed income and would have to move out of the City if the space rents were increased. Bobbie Decker, City resident, lives in another mobile home park in the City and supported denial of the rent increase. The park owner elected to build the park instead of condos many years ago and has enjoyed the benefits of rent control to date. Mobile home owners have invested funds and greatly improved the park property over the years. 2-1-2005 David Ott, City resident, lives in another mobile home park in the City and supported denial of the rent increase. He lives on a fixed income and supports the intent of the rent control ordinance. Vicki Talley, representing Manufactured Housing Educational Trust, 25241 Paseo de Alicia, Ste. 120, Laguna Hills, supported the proposed rent increase because the rent control ordinance only benefits a small group of residents. The return on investment currently earned by the park owner is based on the value of the site 30 years ago and does not reflect the property's value in the current market. Ms. Talley requested to submit a letter with exhibits into evidence. Rebuttal C. William Dahlin clarified that the rent increase application is for a rent increase when a coach is sold in place, not a general rent increase. James M. Trush said that the proposed rent increase would include pursuit of administrative petitions for rent increase and to set a precedent. Council Members' Comments: Council Member Allevato supported the finding of the hearing officer, because the park owner did not submit compelling evidence to support his theory that the premium is caused by rent control. Council Member Bathgate agreed that no evidence was submitted to indicate the premiums were caused by rent control and supported the findings of the hearing officer. Council Member Soto felt the 14% return realized by the park owner was a fair rate of return. He agreed with the Hearing Off'icer's determination that 1) evidence presented did not support his theory that rent control caused the premiums on the sale of coaches, or 2) that park owners were receiving below market rent. The rate of return is a fair return on the owner's investment according to the Rent Control Ordinance. He supported the recommended action. Mayor pro tem Swerdlin supported the finding of the hearing officer. He concurred with the comments and findings of Council Members Bathgate, Allevato and Soto. Mayor Hart supported denial of the proposed increase and supported the purpose and intent of the rent control ordinance. Council Action: Moved by Council Member Soto, seconded by Council Member Allevato, and carried unanimously, 5-0, to 1) Deny the admission of any 6 2-1-2005 new evidence, including a letter from Ms. Vickie Talley, Executive Director of Manufactured Housing Educational Trust (MHET) and a one page matrix, from Mr. C. William Dahlin; while accepting into the administrative record a letter dated January 31, 2005 from Trush Law Office, which does not attempt to submit new evidence; 2) accept the recommendation of the hearing officer; and 3) direct the City Attorney to prepare a resolution reflecting the City Council's findings and motion to deny the proposed rent increase, for City Council consideration on February 15, 2005. ADJOURNMENT There being no further business, Mayor Hart adjourned the meeting at 8:27 p.m. to Monday, February 7, 2005, at 5:30 p.m. for the Public Business Session in the City Council Chamber. Respectfully sub itted, �zj A � l�L,Z�- R. MONAHAN, CITY CLERK : March 1, 2005 ATTEST: .�.10 .� .. _ 2-1-2005 NOTICE OF ADJOURNMENT OF MEETING OF CITY COUNCIL OF THE CITY OF SAN JUAN CAPISTRANO, CALIFORNIA NOTICE IS HEREBY GIVEN, that the City Council of the City of San Juan Capistrano, California, Adjourned its Regular Meeting of February 1, 2005, at 8:27 p.m. to Monday, February 7 2004 at 5:30 p.m., in the City Council Chamber, 32400 Paseo Adelanto, San Juan Capistrano. DATED: February 1, 2005 R. Monahan, City Clerk STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF SAN JUAN CAPISTRANO SS AFFIDAVIT OF POSTING 1, MARGARET R. MONAHAN, City Clerk of the City of San Juan Capistrano, do hereby declare that the above Notice was posted at or near the door of the City Council chamber on February 1, 2005 within 24 hours of adjournment of the above-named meeting. I declare under penalty of perjury that the foregoing is true and correct. R. Monahan, City Clerk