Loading...
HomeMy WebLinkAbout1987-08-17 RRC Minutes t � , MINUTES PALM DESERT RENT REVIEW COMMISSION MEETING MONDAY, AUGUST 17, 1987 CIVIC CENTER COUNCIL CHAMBER * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Deputy City Clerk Mary Frazier administered the Oath of Office to newly appointed Rent Review Commissioners Wanda Tucker, Joyce Wade-Maltais, and Randall White. I. CALL TO ORDER Chairman Jonathan convened the meeting at 4:10 p.m. II. PLEDGE OF ALLEGIANCE - Commissioner Joyce Wade-Maltais III. ROLL CALL Present: Excused Absence: Commissioner Wanda Tucker Commissioner Michael Isbell Commissioner Joyce Wade-Maltais Commissioner Randall White Chairman Sabby Jonathan Also Present: Jean M. Benson, Council Liaison Doug Phillips, Deputy City Attorney Jeff Patterson, Contract Attorney Mary P. Frazier, Deputy City Clerk/Secretary IV. APPROVAL OF MINUTES A. MINUTES of the Rent Review Commission Meetings of August 4, November 3, and December 15, 1986. Chairman Jonathan explained that these Minutes were for meetings held by the previous Rent Review Commission, of which he and Commissioner Isbell were the only remaining members, and they had not yet been approved. He stated that he was not present at the August 4, 1986, meeting and recommended that approval of those Minutes be continued to the next Commission meeting inasmuch as Commissioner Isbell was not able to attend this one. He recommended approval of the Minutes of November 3 and December 15, 1986. Commissioner Tucker moved to continue approval of the Minutes of August 4, 1986, to the next Commission meeting and to approve as presented the Minutes of November 3 and December 15, 1986, based upon the recommendation of original Commission member Sabby Jonathan. Motion was seconded by White and carried by unanimous vote of the Commission. MINUTES PALM DESERT RENT REVIEW COMMISSION AUGUST 17, 1987 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * V. NEW BUSINESS A. STAFF REPORT on Decision by 4th District Court of Appeal Relative to Portola Palms Mobile Home Park. Mr. Patterson reviewed the history of the June 1985 Portola Palms Petition for Hardship Rent Increase, noting that an increase of $19.05 per month per space was granted after the hearing process was completed. The park owner subsequently went to the local Court for a writ and lost; he then appealed to the 4th District Court in San Bernardino, which determined that the Rent Review Commission had made an error in not annualizing the $25.00 per month rent increase from February 1983. He reviewed his Analysis of Recomputation (attached hereto and made a part hereof as Exhibit "A") . He said that as far as the retroactivity ($263.33 per space) , he had checked with other cities, including the City of Santa Monica, and they felt they were authorized to spread the payment of any arrearage over a period of several months because of a potential hardship to some of the homeowners. He said the park owner had also requested that this amount earn interest at the rate of 10%, which the owner had calculated would amount to approximately $52.00 per space, and that the Court's opinion was silent on this issue. He said the Commission could determine whether or not it wished the $263.33 to bear interest. He added that the owner had requested the City's payment of Court costs in the amount of $1,106.30 and advised that the Commission did not have any discretion on this matter because State law is that the prevailing party is entitled to recover any costs; however, he said it might be appropriate for the Commission to recommend to the Council that these costs be paid to the park owner. Commission Questions/Comments: White: What is the effect of this decision on subsequent hardship rent increases or cost of living increases with regard to this park? Mr. Patterson responded that it may or may not have any effect. Added that this was the type of case where interest could be awarded on the amount not paid at the legal rate of 10% compounded, which would increase over time. He said there might also be a question of who would have to pay the arrearage because there may be original homeowners who no longer live in the park or own a mobilehome in the park. Tucker: Felt the retroactive amount might cause a hardship, especially when the homeowners were not expecting it and stated she was in favor of spreading it out over a period of time. Wade-Maltais: Agreed with Tucker and asked for additional information relative to the payment of interest on the retroactive amount. Mr. Patterson explained that computation of the interest would be quite involved and estimated the actual amount of interest would be approximately $25.00 per space rather than the $52.00 requested by the park owner because of the method of calculating the interest. 2 MINUTES PALM DESERT RENT REVIEW COMMISSION AUGUST 17, 1987 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Jonathan: Suggested the Commission hold discussion of each issue until after public testimony was received. He said he remembered when the Commission had heard this case and still felt the Commissioners had made the right decisions. However, reminded the Commissioners that they would be in violation of a Court Order if they did anything other than adhere to that order. Chairman Jonathan invited tesimony from the audience. MR. LARRY HORWITZ of Hart, King & Coldren, 200 East Sandpointe, Suite 400, Santa Ana, 92707-0507, spoke as the representative of the park owner, Mr. Natter, and asked for clarification of Mr. Patterson's Analysis of Recomputation relative to using 22 months to calculate the retroactivity. Mr. Pattterson stated that the request from the park owner was that it be retroactive to July 1985. He said the Commission, by ordinance, had the authority to make increases retroactive to 30 days after the petition for hardship rent increase is filed. However, when the Commission heard this case and reached a decision at its meeting of September 11, 1985, it determined that the $19.05 per month was not to be retroactive to July 1985, and he did not think the Commission would wish to make this change retroactive either. He said the 22 months was computed from November 1985 to August 1, 1987. Mr. Horwitz asked that it be calculated through November 1987 because he felt it would take until then for this increase to become effective. He added that although Mr. Patterson had calculated that the amount which should have been granted was $31.02 per space per month, his figures were different. He felt the Court of Appeal made it clear that it approved the amount which had been requested by his client at the time the petition was filed, which was $33.13 per space per month. Mr. Patterson explained that in the course of testimony during the Evidentiary hearing and Commission meeting, the amount was reduced to $31.02 because certain items were not allowed. Mr. Phillips stated that the difference between those two figures did not relate to the issue addressed by the Court of Appeal, which was the annualization issue. Chairman Jonathan suggested continuing this matter to another date so that Mr. Patterson and Mr. Horwitz would have an opportunity to go over these differences. Mr. Phillips stated it would be to discuss the mathematical computation of the amount of the arrearage, the issue of spreading payment of the retroactive amount over a period of time, payment of interest on that retroactive amount, date of the retroactivity, and what to do with regard to homeowners who have moved since the original Rent Review Commission decision. 3 MINUTES PALM DESERT RENT REVIEW COMMISSION AUGUST 17, 1987 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Commission Wade-Maltais asked that the Commission be given a report of the meeting between Mr. Patterson and Mr. Horwitz well in advance of the next meeting so that each Commissioner would have time to study it. Commissioner Wade-Maltais moved to continue this matter to 4:00 p.m. on Monday, August 31, 1987. Motion was seconded by Tucker and carried by unanimous vote of the Commission. B. STAFF REPORT on Decision by 4th District Court of Appeal Relative to Indian Springs Mobilehome Park. Mr. Patterson reviewed the history of this case, noting that in 1985 a Petition for Hardship Rent Increase was filed. An evidentiary hearing was held, and the Rent Review Commission rendered its decision. The park owner subsequently took the matter to the local Superior Court for a writ of mandate; the case was lost on the local level, and the owner appealed the decision to the 4th District Court of Appeal, which found that the Commission should have given the owner, as a separate expense, $100 per space per year and should have made some of the various other allocations differently, resulting in an additional increase of $6.92 per space per month. He added that when the decision was sent back to the local Superior Court by the Court of Appeal, the judge who heard the matter on the local level was not available to sign the Court Order, which was a writ of mandate directing the Commission to recalculate the increase. He said the judge would not return from vacation until August 24th. Mr. Phillips explained the Court procedures with regard to this issue. He stated the Commission could, if it wished, listen to testimony from the audience and then continue this item to August 31st along with the Portola Palms matter. Commissioner White moved to continue this matter to the meeting of August 31, 1987, in order to have the issues clarified by Mr. Patterson, and not to accept public testimony at this time. Mr. Phillips stated that this had been legally advertised as a public hearing and that problems might be created if people in the audience were not allowed to speak. The motion died for lack of a second. Chairman Jonathan invited testimony from the audience and asked everyone to keep in mind that the Commission was not as familiar with the issues as the people involved and that there would be ample opportunity on August 31st to which date the Commission would be continuing this item. MR. ALLEN PERRIER, 3001 Tahquitz-McCallum, spoke as the representative for Mr.'Jim Goldstein, owner of Indian Springs. He said he felt the issue here was not very complicated and that he had given a copy of the Court of Appeal judgement to Mr. Patterson. He said there were capital expenditures of $26,090 which, under the guidelines at that time, were determined to be of a capital nature. The Commission, in treating that expense under the Net Operating 4 • MINUTES PALM DESERT RENT REVIEW COMMISSION AUGUST 17, 1987 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Income (NOI) formula in the year of application, decided to amortize all of those expenses over five years. The Court found that the Commission had erred in its treatment of these expenses and should have expensed the first $19,100 and amortized only the difference between the $19,100 and the $26,090. He said by his calculations, the amount of the increase should be $6.92 per space per month, and he felt his client was also entitled to receive interest on the amount of the arrearage. He said he did not feel the Commission had the jurisdiction to inquire into the hardship of the tenants in paying this amount and whether or not it should be spread over a period of time. He added that he felt the Commission had the authority to act at this time, without having to wait until the Court Order is signed by the judge. He said he would be out of the country on August 31st and asked that the matter not be continued to that date. MS. JOAN BAUMGARTEN, 81-730 Highway 111, Indio, spoke as the attorney for the residents of Indian Springs. She agreed that the Commission had the jurisdiction to hear the matter today and said she did not know of anything in the law which would prohibit taking action when the Commission knows what the Court decision will be. However, she disagreed with the interpretation of the action mandated by the Superior Court Order. Mr. Phillips stated that he did not have a problem with going ahead with this matter without having the Court Order and that the language of the Court of Appeal decision was very clear. Mr. Patterson stated he was concerned with the $19,100 per year for the expensing of capital improvements. He said the Commission discussed in depth during the hearing whether or not the $6.92 increase should be in perpetuity or whether it should be for just one year. He felt this was a complex issue and one which he was not prepared to address at this time. Upon question by Chairman Jonathan, Mr. Patterson responded that the Court Order says give the park owner $6.92 per space per month increase. Ms. Baumgarten disagreed and stated that the Order directs the Commission to recalculate the increase by treating the $19,100 as an expense, which she said did not translate into a rent increase of $6.92. Commissioner White stated that as a new Commissioner he was not familiar with the Indian Springs problem and the Appellate Court decision. He felt the matter should be continued because the Commission did not yet have the Court Order or the findings of fact from the hearing officer with which to base a decision. Commissioner Tucker agreed that the Commission should listen to the public testimony at this time but felt the Commission needed additional time to review the information prior to making any decision. Commission Wade-Maltais felt it was not a simple matter and that it should be continued. Chairman Jonathan agreed with the Commissioners' comments. 5 MINUTES PALM DESERT RENT REVIEW COMMISSION AUGUST 17, 1987 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Commissioner Wade-Maltais moved to continue this matter to August 31, 1987. Motion was seconded by Tucker. Commissioner White stated that if this date was inconvenient for any of the parties, the Commission should allow the date to be changed. Commissioner Wade-Maltais amended her motion to continue the matter to a date convenient for all parties. Commissioner Tucker amended her second, and the motion carried by unanimous vote. Ms. Baumgarten submitted documents which she felt would help the Commissioners in reviewing the case and making a decision (on file and of record in the City Clerk's Office) . She reiterated her earlier comments that the Appellate Court decision did not specify that the Commission shall give the park owner an additional $6.92 per space per month and did not say interest must be included. She said the decision directed the Commission to recalculate the increase and treat the first $19,100 in capital expenditures as an expense. She said the petition used 1984 figures to project the amounts for 1985 because complete figures were not yet available for 1985. She submitted copies of completed financial statements for 1985 for Indian Springs, noting that no capital expenditures were listed, which meant the owner did not spend that money and, therefore, the amount included in the petition was excessive. She also distributed copies of the revised petition which had been submitted by the park owner and stated she had added an extra column showing the actual audited figures which were not available at the time of the original hearing. She felt it was appropriate for the Commission to consider these figures when calculating any rent increase. She concluded her report by stating she felt the Court of Appeal decision intended that the Commission authorize the park owner to charge the homeowners for the improvements that were actually made; if the Court intended to simply grant the $6.92 increase, it would have said that. Mr. Perrier stated that these were legal issues on which the Commission has little or no discreation. The Court of Appeal has said that the manner in which the increase was determined shall be recalculated, and it did not say the case is to be retried or that new evidence is to be considered. The recalculation is to be based on capital expenditures of$26,100 and to treat the first $19,100 of that as a capital expense. Mr. Phillips stated he had looked at the Court of Appeal decision and felt the matter should be continued to allow the Commission an opportunity to become familiar with that decision. Chairman Jonathan suggested that the City staff work with all parties involved and schedule a date and time convenient for everyone. The Commission concurred. VI. ORAL COMMUNICATIONS None 6 . MINUTES PALM DESERT RENT REVIEW COMMISSION AUGUST 17, 1987 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * V. ADJOURNMENT Upon motion by Tucker, second by White, and unanimous vote of the Commission, Chairman Jonathan adjourned the meeting at 5:51 p.m. RESPECTFULLY SUBMITTED, MARY P. FR IER, SECRE RY 7