SARGENT TESTIFIES IN HUMBOLDT MHP RENT INCREASE HEARING

SARGENT TESTIFIES IN HUMBOLDT MHP RENT INCREASE HEARING

Assisting resident group attorney Bruce Stanton, Deane Sargent provided expert witness testimony before a Hearing Officer engaged by Humboldt County in response to a Rent Increase Application by the owner of Ocean West (OW) Senior Village, McKinleyville.

The Owner of OW submitted a petition for the right to raise the monthly space rents approximately $300 from an average of $494 to $800. (In addition to the monthly space rents, residents pay an average of $161 month to cover utility costs.)

Humboldt County adopted a mobile home park rent stabilization ordinance in November 2016.
Generally, under mobile home park space rent stabilization ordinances, park owners are entitled to annual rent increases tied to the percentage increase in the Consumer Price Index. Additional rent increases based on a Fair Return claim can be obtained through a Rent Increase Application process.

In the OW case, the Owner did not present any claims about operating cost increases or evidence that the base year (2016) rents are disproportionately low. Instead, the Owner claims a right to raise rents above current levels with the addition of an amount to recover a “Leasehold Advantage”

The Owner determined the “Leasehold Advantage” as the benefit to HOME owners due to low site rents and concluded that this benefit should be owed to the park Owner instead.
The County’s expert, Dr. Kenneth Baar, stated that, as far as he was aware “this methodology has never been used in setting the allowable rent of mobile home park spaces . . .”

Sargent was asked his opinion as to whether the Owner is entitled to such an adjustment under the Ordinance, if the Leasehold Advantage method is an acceptable Fair Return methodology, and, further, was the Leasehold Advantage methodology (should the County decide to use such methodology) properly applied.

Although the Hearing examination and cross examinations lasted 8 hours, in brief, Sargent stated that the Owner was NOT entitled to such an adjustment under the Ordinance, that the Leasehold Advantage was NOT an acceptable Fair Return method, and, in any case, the Owner did not calculate it properly.

The attorneys for the Owner submitted volumes of documents in support of the Owner’s claim, all of which were countered by Attorney Stanton.

The Hearing Officer listened to all the testimony, accepted all the documents and is expected to render her determination before the end of February.

We will keep you posted.
Deane

Deane Sargent and PMC Financial Services have been helping mobile home park resident groups and cooperatives to organize and find financing to buy their parks for over 20 years.

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