RENT CONTROL ATTACKS #4 – THE WRAP UP
This is the last in a four (4) part series on things to look out for when your Rent Stabilization Ordinance (RSO) is under attack. The other three parts can be found at www.pmcfinancialservices.com.
In order to defend your RSO, you have to know the PLAYERS:
THE CITY COUNCIL/COUNTY SUPERVISORS
THE RENT CONTROL BOARD
THE CITY/COUNTY STAFF
THE CITY/COUNTY ATTORNEY
THE CITY/COUNTY EXPERT WITNESSES
THE OWNER (applicant)
THE OWNER’S ATTORNEY
THE OWNER’S EXPERT WITNESSES
YOUR ATTORNEY
YOUR EXPERT WITNESS
NOTE: The goal of this process is to allow the park owner to have a ‘fair’ return, based upon the park’s prior operating history. There are many opinions on just exactly what constitutes a ‘fair’ return.
[The opinions expressed below are mine and mine only. I am not an attorney, but I try to be truthful and blunt, since this stuff is confusing. DISCLAIMER: For simplicity sake, I use the terms “folks” or “guys” in this article. However, many of the Players are, of course, outstanding talented women. And, occasionally, some Players are only marginally carbon-based life forms of undetermined origin.]
THE CITY/COUNTY COUNCIL
These folks are your local elected officials. They adopted the Ordinance (RSO) that governs the whole deal, and, subsequently, approved the Administrative Code (the Code) that provides the details of how the Ordinance should be applied. The council is usually composed of nice people, but they will distance themselves from the proceedings. It’s a lose/lose deal for them – you guys may be the local voters but the other guys represent powerful, well-financed interests.
THE RENT CONTROL BOARD
These folks are local citizen volunteers (unpaid). They usually are also nice people who are trying to do the best they can in a tough situation. That said, some RCB members are experienced, smart and will try to be balanced, while not being overwhelmed by the details. Some, however, are confused, inexperienced and, occasionally, have a hidden agenda (not necessarily in your favor). They make the decision on the case, but the decisions can be appealed to the City Council.
THE CITY STAFF
These are KEY folks. They ultimately do all the heavy lifting of analyzing the owner’s case and will probably present recommendations to the RCB. That said, they probably wish the whole deal would go away, since they have other ‘more important’ things to do. They are supposed to be impartial and interpret the Ordinance and Administrative Code fairly. Sometimes they do, but sometimes they don’t. Watch them like a hawk.
THE CITY ATTORNEY
Pretty much that same as the City Staff. Keep your eye on them also.
THE CITY EXPERT WITNESSES
These can include folks who ‘specialize’ in RCB actions, along with appraisers and other guys. There is a tendency to automatically accept whatever they come up with as Gospel, since they are supposed to be impartial. Don’t blindly accept their comments. I was in a hearing recently where the City ‘expert’, with zero support in the Code, and specific Code language to the contrary, inferred the intent of the Code regarding an issue.(Note: You are not supposed to be allowed to do this.) That inference ultimately cost the residents their case and about $60-$70,000 a year in increased rent. Note that the City Staff should have pushed back on this but did not. Nor did the RCB.
THE OWNER
This person may be the actual park owner, but is usually the owner’s ‘representative’ – corporate minion, management company guy, staff member, etc. Their primary job is to sit in the hearing, shut up, and look sincere, while their attorney and expert witnesses make their case.
THE OWNER’S ATTORNEY
These guys are the ‘hired guns’ for the owner. Their job is to make the Owner’s case that (‘poor owner’) he needs more money or there could be bad stuff that happens – reduced maintenance, park closures, etc. Many of these guys are normal attorneys – zealous and trying to do the best they can for the owner. Some, on the other hand, are unethical, waffling, obfuscating pond scum, who lie, confuse, misrepresent, threaten lawsuits, and spin anything they can to promote the owner’s case.
THE OWNER’S EXPERT WITNESSES
These guys are providing ‘verification’ of the owner’s case. They can include appraisers, CPAs, management company folks and other specialists. They typically don’t outright lie, but they can be very (very) selective about what data they use to support the owner’s claim that he is not getting a fair return. My rule of thumb is that the larger the number of owner’s expert witnesses, the weaker the owner’s case. The attempt is often meant to overwhelm the staff and the RCB with thousands of pages of confusing documents.
NOTE: If the owner gets a much as a $1 increase in rents, the application, in many cases, is deemed ‘successful’ and the resident group gets to pay for all (ALL) the application costs, including the owner’s attorney and the expert witnesses. Not being a lawyer, my take is that this concept is based on a bogus legal ruling some years ago that was jumped upon by owners and their attorneys. Sometimes the total costs can be reduced if the owner does not prevail on all his issues. But it is a little like paying for the ‘privilege’ of being mugged.
YOUR ATTORNEY
This guy is your ‘white knight’ seeking to analyze the owner’s case, point out the BS, and generally defend your interests. Since the RCB and the staff tend to ‘split the baby’ and give the owner something (mostly I think to try to appear ‘fair’ and avoid lawsuits), you usually can’t expect to walk away scott free. You get to pay for his services.
YOUR EXPERT WITNESS
This guy is trying to analyze the details of the owner’s case and assist your attorney in pointing out the BS. Because of the ‘split the baby’ philosophy of the RCB and staff, his points may be ignored. Since, full disclosure, I have been a expert witness for resident groups, I tend to think these guys are pure of heart, noble of purpose, and believe in Truth, Justice and the American Way. That said, they are still often ignored. You get to pay for his services.
Soooo,
At the end of the day, these application outcomes are uncertain. It is important for you to communicate with your local political leaders and staff to ensure they understand the issues. Your team will attempt to do the best they can, but there may be agendas that are hidden that can stack the deck against you.
NOTE: A strong well-defended RSO makes your park LESS attractive to other park investors who might normally want to buy it. This means that THE RESIDENT GROUP IS OFTEN THE MOST ATTRACTIVE BUYER. If you want to discuss how to buy your park, check the contacts provided below.
Contacts:
Rent Control Attacks:
Bruce Stanton, attorney and GSMOL General Counsel: 408-224-4000 brucestantonlaw@yahoo.com
Resident Park Purchases:
Dave Loop, attorney and GSMOL VP – Resident Owned Parks: 831-688-1293 deloop1@sbcglobal.net
Deane Sargent, finance and organization guy: 415-271-3919 deane.f.sargent@gmail.com
Deane Sargent
PMC Financial Services
3165 Chandler Egan Drive
Medford, OR 97504
deane.f.sargent@gmail.com
415-271-3919 Deane Cell
www.pmcfinancialservices.com
CA license 01040463
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.