Some residents of rent-controlled Santa Rosa mobile-home park Rancho San Miguel are crying foul over a $42 monthly increase levied on tenants by new owners Rutherford Investments.
"[We] pleaded that the increase would cause significant financial hardship on our residents, and we hoped Rutherford would make concessions accordingly," says Don McLeod, president of the park's homeowners association.
Rutherford, which has offices in Mill Valley and Los Gatos, purchased Rancho San Miguel in April of 2012. The property's value was reassessed when sold, and subsequently the property taxes for the park increased. That increased tax burden is being passed on to residents.
At a meeting with park owners, residents and city officials in December, it was determined that the owners are within their legal rights to pass the new cost on to residents. "Before we ever went in to pass this through, we made a point of meeting with [residents] and contacting them," says Greg O'Hagan, one of the park's managers.
Under the rent-control ordinance, landowners are allowed only a 2.8 percent annual increase in rent. But the ordinance also allows owners to pass along "any new or increase in government mandated capital expenditures and operating expenses, including taxes."
McLeod's dispute lies in the hardship placed on park residents. Rancho San Miguel has the second highest maximum base rent of rent-controlled mobile home parks in Santa Rosa, at $655.60. The senior living community has many residents on fixed incomes for whom a $40 monthly increase can be hard to absorb, including several whose sole income is Social Security.
"Park owners hate rent-control ordinances," says McLeod. "Some park owners will take full advantage of any provision in a rent-control ordinance which allows them to pass through a cost of doing business to residents."
A similar scenario played out in San Jose in 1988, and the city denied the increase under wording in the ordinance which allowed the city to "take into consideration any increase in rent that results in financial tenant hardship." That decision was upheld by the U.S. Supreme Court.
Santa Rosa's rent-control ordinance has no such provision for hardship.