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Renters fight owner over hike

Posted: December 15, 2009 10:28 p.m.
Updated: December 16, 2009 4:55 a.m.
 
Residents of the Polynesian Mobile Home Park pay $400 to $675 a month to rent a space in the early 1960s-era park that sits in a Newhall creek basin.

The rent is among the lowest in Santa Clarita, and longtime residents who said they can't afford more hope to keep it that way.

At a special city meeting tonight, they will be fighting the park's owner to stop a proposed rent hike of up to $200 a month - a 39-percent increase for the average resident.

The owners are arguing it's necessary to pay for flood damage that occurred in 2004 and 2005. Lawyers representing the residents, meanwhile, are claiming the rent increase is retaliation for a negligence lawsuit they settled earlier this year.

Santa Clarita's Manufactured Home Rental Adjustment Panel could decide tonight whether to allow the increase. One of the duties of the five-member panel is to protect mobile home residents from excessive increases in rent.

"There's a lot of anger in the park about the increase," said Tom Foster, who has lived in the park for 18 years. "About a quarter (of the) people in the park are retired and living on fixed income."

The owners at Polynesian Mobile Home Park LLC declined to comment Tuesday.

But in documents they filed with the city, the owners say the rent increase is necessary to recover costs on flood repairs.

In September, Polynesian Mobile Home Park LLC offered residents two options to pay for flood damage repairs: either pay an extra $200 a month for the next 20 years, or pay an additional $135 permanently.

The 143-space park, which sits at the corner of Newhall Avenue and Sierra Highway, had lost its bridge in a series of floods in 2004 and 2005. The owners replaced the bridge, which serves as the only exit and entrance for the park.

From 2005 to 2007, the cost of the owners' insurance increased by more than $75,000, according to a city-commissioned report.

In March, the owners also settled residents' negligence lawsuit for $500,000.

A firm hired by the city to provide an independent analysis of the park's financial documents says the rent increase is too high and was calculated incorrectly.

The panel
In November, residents requested a hearing with the mobile home panel. It will have the final say on whether the rent increase will be allowed, said Armine Chaparyan, the city's redevelopment manager.

The five-person panel works independent of other city committees and has broad power in resolving disputes between tenants and landlords of mobile home parks, said city attorney Rachel Richman. The panel has power over all 14 mobile home parks in the city, she said.

The city hired private real estate analysts to determine the reasons for the rate increase, Chaparyan said. The report says the $200 rent increase is too high, and that rent should be increased by about $120 a month at most.

The report also says more documents, including the park's insurance policy, could more clearly make the owners' case.

Owners say rent will pay for repairs
In letters sent to the city, the park owners say they are trying to recover more than $6 million for the cost of repairs, as well as receive a "reasonable rate of return" for spending money on the repairs.

The park has spent about $1.6 million to rebuild damaged roads, bridges and new water lines, among other things.

Jeff Hacker, a lawyer for some of the residents, sent a letter to the city Monday asking the panel to stop the rate increase. Hacker said the proposed rent increase is retaliation for the residents' earlier negligence lawsuit.

In the letter, Hacker said the rent increase wouldn't have been necessary if the park owners had properly maintained the park before the 2005 flood.

Hacker said he would not comment further until after tonight's hearing.

A difference of opinion
The biggest disagreement between the consultants and the owners of Polynesian Mobile Home Park LLC is in how much money the owners should receive for investing in the flood damage repairs.

The park owners want nearly $3 million more for their investment than the consultants think is reasonable.

In a report submitted to the panel, the consultants say the owners' rate of return was incorrectly calculated.

The owners want $3.6 million for the investing in the repairs; the consultants think about $650,000 would be more reasonable.

The owners combined the cost of flood damage repairs and interest on the loan to pay for the repairs, with a 12.9 percent rate of return on their entire investment. The way the owners calculated their rate of return is unconventional, said Jim Simon, who helped prepare the report for the panel.

The owners are asking for two returns on their $1.6 million flood damage investment, Simon said. They are asking the mobile home residents to pay interest on a loan for which the owners should already be getting reimbursed by the bank, he said.

"Any subsequent compensation in the form of additional rent would effectively be ‘double-dipping' in that the owner would receive dual return on the same money," the report says.

It's possible the issue won't be settled at tonight's panel hearing, Chaparyan said. The owners of the park could provide more information justifying the rent increase.

If more documentation is given to members of the panel, the city will likely set up another public hearing later, she said.

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