Once again, the Star Editorial Board fails us ("Vote no on Measure F," May 16). It seems to have bought the owner’s vacancy control argument without a close look at the numbers, or an understanding of the economics of mobile home parks as a real estate investment.
I’ve been attending RSO meetings regularly. The owner has consistently refused to provide the city with any information throughout the entire process of developing this ordinance. He objected to the formula for the annual increase. The council asked whether there was another index more closely tailored to the operating characteristics of the park. He sat silent. His attorney claimed that the city formula would drive profits to zero. The city attorney advised the council that the courts had analyzed and rejected that very argument.
Let’s look at vacancy control. The owner raised this issue at a public meeting in August. The council asked him to provide basic rent roll informational data to help the council understand the magnitude of the issue that concerned him. What does he consider “market level”? How many spaces are “unusually low?” He refused to provide any information.
Oddly, it seems that he has just provided some of this data to his park tenant “insiders,” those who have just written to the paper.
Let’s look at those numbers. It is a fact that as a real estate investment opportunity, mobile home parks have low operating margins compared to other real estate investments. They also produce healthy rates of return for their investors. Let’s look at Vineyard Valley. The above and below market rents cited in the recent letter appear to generate around $2 million or more in annual revenue. There is no debt. Prop 13 limits property taxes. The park operates with four landscape maintenance workers, three managers, the owner, and a weekend manager who lives in the park. Like most mobile home parks, at Vineyard Valley the return on investment after expenses appears quite healthy. And under RSO, gross revenues continue to increase by 3 percent year after year, an amount that the owner said was sufficient to keep the park up to par.
There is no evidence that RSO will cause park maintenance to decline. But beyond that, there is ample room in the ordinance for the owner to make a case to raise rents above the cap. To do so would require the owner to produce some verified, relevant, financial records that confirm his expenses. This is needed so that owner and tenants, or a neutral mediator or arbitrator have relevant financial information to determine whether the owner is prohibited from obtaining a reasonable return – which is one of the objectives of RSO. Based on past experience, one can only assume the park owner is unwilling to provide any financial information whatsoever. Perhaps that is why he is fighting this ordinance so fiercely with the help of his monied, outside PAC.
There is no basis for the speculation that RSO will force the park owners to sell. More likely, after all these years, the investors will want to cash out. And there are plenty of real estate investors and hedge funds looking to buy mobile home parks and then raise the rents.
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Money on litigation? The council designed this ordinance to withstand legal challenge based on legal precedents. It is the owner who would throw away money needlessly if he files a lawsuit.
What about the owner’s last-ditch effort to gain support by increasing the lease term to 15 years? A long-term lease does nothing to protect a fixed income senior in St. Helena who wants to move into Vineyard Valley from losing the chance because of an exorbitantly high base rent.
Finally, property rights are a constitutional matter. California courts have consistently upheld the constitutionality of mobile home park rent stabilization. After all, protection of tenants from unreasonable rent increases must be balanced against the ability of the park owner to obtain a reasonable return on investment. Somewhere along the line, the Editorial Board failed to recognize that as well.
“Yes on F” is endorsed by scores of elected officials and thoughtful, informed St. Helena residents. Cast your vote based on balanced and verifiable facts, not speculation. Vote “Yes” on Measure F!