In what could be a precedent-setting move for mobile home parks across the state, the Goleta Planning Commission voted unanimously Monday night to recommend to the council a development agreement that would allow for the condominium conversion of Rancho Mobile Home Park in Goleta’s Ellwood area.

The decision came after hours of presentation, public comment and deliberation as the commission decided what to do with the controversial project, which had been a point of contention between the city and Daniel Guggenheim and family, the park’s owners.

According to Commissioner Bill Shelor, the development agreement, which consists of a tract map and a development plan, “represented a good faith effort” between the city and the landowner.

Until recently, the city and the landowners were in a years-long fight that started when the city incorporated in 2002 and adopted the county’s rent control ordinance. The Guggenheims, calling the ordinance a new one, challenged the city’s action, calling it a violation of property rights. While the coach owners paid relatively low rents for the spaces they lived on, they were allowed to turn around and sell their units at market rate. The city won on a technicality through a decision made on a similar case, and the case is on appeal in the 9th Circuit.

Meanwhile, the landowners launched several other lawsuits against the city for Goleta’s requirement of an Environmental Impact Report to assess displacement of residents (since about two-thirds of the park is in the coastal zone), for damages related to that delay. They also sued over a moratorium the city instituted as it waited on the state to resolve legislation related to mobile homes, and damages for that delay.

With the legislation no longer pending at the state level, the city has no more basis for the moratorium, according to city attorney Tim Giles. And with a development agreement in the works that would seemingly do away with the potential to displace low-income residents, the Coastal Act-required EIR would no longer be needed either, he said. The damages lawsuits have been stayed pending this development agreement.

Underlying the situation is the notion of state pre-emption, Giles said, where the state already has made legal decisions on the issue that trump the rulings of local government.

According to the proposed agreement, residents who wish to purchase their lots can do so at a 15 percent discount of the purchase price. The landowners also would be willing to finance 15 percent of the purchase price at 5 percent interest over 20 years. The city would engage in helping residents find funding sources, like the state-sponsored Mobilehome Park Resident Ownership Program loan at 3 percent interest over 30 years based on the buyer’s income.

Furthermore, tenants who qualify as low- and moderate-income who do not wish to purchase will experience rent increases “limited to the difference between pre-conversion rental rate and the market rate, over a period of four years … but in no case could rental rate increases exceed the Consumer Price Index.”

Meanwhile, non-purchasing residents who are classified as “above moderate” in their income would be subject to increases over a seven-year period up to $800 per month. At the end of the eighth year, the rents would go up to market rate. In contrast, state law provides for increases in a four-year period, with rents going to market rate in the fifth year.

A “Reserve Fund” also would be established by the park owners for repair and replacement of major infrastructure in the park, at 7465 Hollister Ave.

Some of the residents themselves weren’t so sure about the good faith of this proposal.

“Mr. Guggenheim is not happy with rent control,” was how Ken Tatro, Rancho Mobile Homeowners Association president, summed up the situation. He said the statute behind mobile home conversion that allows park owners to subdivide was meant to be done at the initiation of the resident, not the park owner.

Elizabeth Mason, president of the Santa Barbara West Mobile Home Park Association, aired her concerns about what the impact of the decision would have on other mobile home parks in the area, saying that the increased expense of living without rent control, plus mortgage and other expenses would be enough to displace many mobile home residents. The Guggenheims own only Rancho Mobile Home Park, which houses 150 of the 450 total mobile homes in the Goleta Valley.

Other concerns included the loss of affordable housing, loss of home equity, concerns about financing opportunities in a down economy, cultural resources lost through development and gentrification.

Still, in the face of state law, pending litigation and protections for tenants in the agreement that surpass those of the state, the commission voted to recommend the agreement to the council.

“I can’t take any risks that only state law will offer protection to the tenants of the mobile home park,” said Commissioner Jonny Wallis, who was part of the council that vigorously fought over rent control in the early days of the city.

There still will be some kinks to iron out, such as the city’s lack of a certified Local Coastal Plan. Without an LCP, only the California Coastal Commission can issue a Coastal Development Permit.

Also, the county fire department’s requirements for the development have yet to be worked out. County fire requires hydrants to serve the 17.84-acre park, as well as a turnaround for easy access in and out of its 3/8-mile length. Representatives of the landowners say additional infrastructure could be infeasible and the cost could wind up reflected in the rents. The applicants and the fire department are expected to meet and confer on that issue before it comes back up before the City Council.

Write to sfernandez@noozhawk.com.