SANTA CRUZ – For 36 mobile home park residents who came to watch, the mood was tense during a Friday afternoon hearing on a special space rent increase at Pinto Lake Mobile Estates in unincorporated Santa Cruz County.
The owner, Waterhouse Management in Roseville, filed a petition with the County of Santa Cruz, asking to raise rents by $210 per unit.
That’s an increase of 40 percent to 50 percent, depending on the unit, according to Henry Cleveland, a member of the Santa Cruz County Manufactured and Mobile Home Commission, noting a report using the owner’s figures show net operating income of $466,000 in 2015.
Settlement talks were unproductive, Cleveland said, with Waterhouse coming down to $197 per unit and park residents offering $35.
Pinto Lake Mobile Estates, with 177 spaces and home to more than 200 people, is one of six parks in Santa Cruz County owned by Waterhouse.
Cleveland said he worries the hearing outcome could affect some 5,000 mobile home residents in the county.
“It’s really important what happens here,” said Pat Jenkins, attending from Rodeo Gulch Mobile Estates in Soquel.
Attorney Terry Dowdall of Orange represented Waterhouse. His expert was Michael St. John, a Berkeley economist who has largely represented property owners.
Creighton Mendivil of Senior Citizens Legal Services represented homeowners at Pinto Lake Mobile Estates. His expert was Ken Baar, a consultant with a doctorate in urban planning who wrote a seminal paper in 1983 saying rents in the free market increase at two-thirds of inflation.
St. John contended Baar was incorrect even though Baar’s opinions have been cited in court cases.
“These guys have been fighting each other for years,” whispered Chris Girard, president of Pinto Lake Mobile Estates.
George Gigarjian, the hearing officer, listened for three hours and asked questions of his own.
The county ordinance allows a mobile home park owner to seek a rent increase if needed to provide net operating income, after adjusting for inflation, comparable net operating income in the base year.
When the base year income is not available, as in this case, the county presumes that operating expenses, except property taxes and management expenses, increase by 10 percent a year from the base year to the first year of ownership, in this case 2005.
The ordinance specifies net operating income be adjusted by 50 percent of the change in the Consumer Price Index in the base year, putting the burden on any party seeking another percentage to demonstrate that a different percentage is appropriate.
St. John contended indexing at 100 percent would provide a fair return from an economists’ point of view, and that a lower percentage is a “political adjustment.”
Baar argued that the courts have upheld standards with 50 percent indexing.
“Dr. St. John and I disagree but we ended up with basically the same numbers,” he said.
Gigarjian made the same point, noting the two expert both arrived at a $40 increase among their scenarios.
One of Baar’s scenarios would cut rent by $14.
Gigarjian urged the two sides to settle before 5 p.m. Friday. A decision could come 30 days later.
Patricia Kieffer, a Pinto Lake Mobile Estates homeowner, questioned the claim that the park is well-maintained.
“We stand up when we have meetings — we don’t have enough chairs,” she said.
“I’m discouraged,” said Mo Curry, 72. “I pay $980 a month in mortgage and my rent keeps going up every year.”