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Rent
Board Stories, August 2002
As Rent Board Story Part 100 approaches, I never cease to be amazed at the Rent Board's continuing refusal to follow requirements of state and local law in ever more onerous and outrageous ways. For example, back at Rent Board Story Part 47 titled, " Secret Files and Hidden Penalties," this Column reported that in 1990 the Board set up a system of secret files in order to avoid the time limitations at Section 1805 (b)(1) in which requires the Rent Board to take "final action" within 120 days of the date excess rent complaint are filed. I can find no better example of the Board using its system of secret files to deprive property owners of their rights to fair hearings than the thirty-six Village Trailer Park excess cases that are currently before the Court of Appeal, the Superior Court and the Rent Board as this column is being written. These cases demonstrate that the Rent Board has no intention of complying with the requirements of state statutes, published court decisions and/or the Santa Monica Rent Control Law. However, in order to understand what is taking place, you must first know a few things about the state Mobile Home Residency Law, Civil Code §§ 798 et seq., (hereinafter referred to as the "MRL"). The MRL permits mobile home park owners to charge rent that is greater than the amount permitted by local rent control agencies if the park owners enter into long-term leases with the "tenants" who own the trailers, homes or coaches (i.e., the "homeowners"). Homeowners who are protected by a local rent control law may agree to pay more rent because the park owner has the right to order that smaller and/or older trailers and/or recreational vehicles removed from the park when they are sold. See MRL § 798.73. Therefore, a homeowner who wishes to sell his/her "home" benefits from a long term lease which can be assigned to a new purchaser as a guarantee that the "home" will not be ordered to leave the park upon sale. This makes the "home" more valuable because a new buyer is purchasing both the "home" and the right to keep that "home" in Santa Monica under the terms of a long-term lease. Village Trailer Park entered into these types of leases for approximately ten years without any problems from the Rent Board. Whenever it entered into a new lease, it would notify the Board and provide a copy of the lease. The Rent Board would then review the lease, exempt the trailer space from Rent Control Registration fees and treat the space as exempt from rent control. All was well until 1999, when the 'homeowners" hired a tenant attorney, (whom I politely refer to as "Sonya Monica") and the administrative assault began on Village Trailer Park began. On June 11, 1999, the first set of "homeowners" filed twelve complaints with the Rent Board claiming that the rent charged pursuant to the leases was "excess rent." The Rent Board took a month to organize the complaints and then dubbed them "filed" on July 12, 1999. It then sent Village Trailer Park threatening letters, which demanded that it refund more than $50,000 of "excess rent" to the tenant homeowner's. When the park owner refused to comply, all twelve cases were "consolidated" for hearings (although nothing in the Rent Control Law permits the Board to "consolidate" excess rent hearings). However, since it is more fun to have one "landlord" against twelve tenants in excess rent hearings, the requirements of the Rent Control Law do not cause great concern. At the outset of this debacle, Village Trailer's Park attorney objected to the hearings on the grounds that the leases were exempt from rent control under the MRL and therefore the Rent Board has no authority be holding excess rent hearings. Its attorney cited the published Appellate Court decision of Mobilepark West Homeowners Association v. Escondido Mobilepark West (1995) 35 Cal.App. 4th 32, 41 Cal.Rptr. 2d 393 in which the Court of Appeal held that the City of Escondido's attempt to regulate leases under provisions of the MRL were facially invalid because the Board was "preempted" by the state MRL. The court explained its reasoning at 35 Cal.App.4th at 45 as follows: "When the state has set the standards for exempting a legal area from local control, it is axiomatic that the local government cannot determine whether the criteria for preemption are met. To allow the local government to do so places the power to determine preemption in precisely the wrong hands." Although the Court of Appeal then reversed the Escondido Rent Board's attempt to regulate leases under the MRL, the Santa Monica Rent Board Legal Staff was not impressed with that decision. It reasoned that the Escondido law concerned "pre-approval" of the leases, which the Santa Monica Rent Control Board did not require. The Santa Monica Rent Control Board was merely invalidating the leases at excess rent hearings years after they went into effect and after some of the 5-year leases had expired. The Legal Staff also reasoned that since the Santa Monica Rent Control Law says nothing about the Board's authority to apply state laws, there could be no possible conflict with state law requirements. (The concept that the Rent Control Law only authorizes the Rent Board to apply that Law completely escaped the Board's Legal Staff.) The twelve "consolidated" were then assigned to the infamous hearing examiner known as "the Dragon" who held many hearings and issued written decisions on December 29, 1999. Each decision found that each of the long term leases was invalid and awarded excess rent, interest and penalties in the amount of $63,317.87 because the park owner charged "excess rent" in violation of the Rent Control Law. This amount was determined by reducing the space rents from $300 -$350 per month (as stated in the lease agreements) to $230 - $250 per month based upon the rent in effect at the time of the earliest lease. Village Trailer Park was then given ten days from the date the decisions were mailed to appeal those decisions. (That was the hearing examiner's way of saying "Happy New Year!") After the hearing examiner's decisions of December 29, 1999 were appealed (i.e., ten days later), the Board did not consider the appeal and render final decisions until July 13, 2000 and it did not issue a written "final decision" until July 16, 2000. Thus, decisions that were first filed on June 11, 1999, and should have been decided within 120 days, where not decided by the Board for more than a year. And Village Trailer Park's problems were just beginning. While the first dozen excess rent cases were before the Board, the Board was processing the next twelve excess rent complaints, .M-0509 though M-0520. These cases were deemed "filed" on or about May 31, 2000, and were then "consolidated" and assigned to the same hearing examiner who rendered the earlier decisions. The hearing examiner then held hearings and issued decisions January 25, 2001. Each of these decisions determined that each of the long-term leases was invalid and then awarded excess rent, interest and penalties in the amount of $52,252.30. Again, Village Trailer Park appealed the decisions, and again the Rent Board upheld the decisions on May 24, 2001. Litigation followed the decisions just identified, and by the end of 2001, the first set of twelve excess rent decisions had been partially reversed by the Superior Court and were on their way to the Court of Appeal. Village Park also filed suit against the tenants who filed the second dozen excess complaints and the Court of Appeal agreed with the owner that the Board did not have the authority to determine the validity of the lease agreements and that issue back to the Superior Court for further determinations and/or arbitration. Although these events should have given the Board a strong indication that it should not be invalidating leases authorized by State law or holding excess rent hearings on properties that were exempt from its jurisdiction, the Board did not get the message. Between August 2001 and February 2002, the Rent Board opened twelve new secret files, "consolidated" the next dozen complaints and scheduled them for hearing on March 6, 2002. Before the hearings took place, Village Park filed a lawsuit to compel arbitration and stop the Board from holding the hearings. The outcome of that legal action and/or those excess rent hearings has not been determined as this column is being written. Whatever the ultimate
outcome of the various Village Trailer Park cases, the Board's actions
clearly demonstrate its callous disregard for state laws, judicial decisions
and the Rent Control Law. These case files might also convince you that the only economic fate worse than being a landlord subject to the authority of the Santa Monica Rent Board is to be a trailer park owner with spaces that are supposed to be exempt from the Board's authority. |