Caught between a rock and a hard place, the Goleta City Council on Tuesday unanimously voted to move forward with a development agreement with the owner of Rancho Mobile Home Park, 7465 Hollister Ave.
“I have no love for Mr. Guggenheim,” Councilman Michael Bennett said of park owner Daniel Guggenheim. Nevertheless, Bennett and his colleagues reluctantly voted to push ahead with a proposed development agreement that would convert the park to tenant-owned spaces from rentals.
The vote came after hours of report, discussion and testimony from staff, Guggenheim’s representatives and attorney, and mobile home residents who crowded the chambers to standing-room-only capacity.
The meeting signaled what could be the culmination of years of litigation between Goleta and Guggenheim, who first sued the city when it adopted Santa Barbara County’s rent-control policies upon incorporation in 2002. Guggenheim called the act an unlawful taking: coach owners could pay low rents and then sell their units for more than they were worth because of them.
Four more suits followed, one for a moratorium the city imposed on mobile home park conversions as the state wrestled with legislation that could have changed the rules, one for an environmental impact report the city required for the conversion, and two for damages related to those cases.
The first case, lost and then won by the city, is currently before the 9th U.S. Circuit Court of Appeals. The damages lawsuits have been stayed pending the development agreement, while the cases on the EIR and the moratorium were judged against the city, which is currently appealing those decisions.
Outside of the lawsuits, the state, according to city counsel Tim Giles, prefers conversion, having already made legal decisions that outweigh the rulings of local government.
Both city and park representatives asserted that the development agreement was a better deal than what the state would offer in terms of rent control.
“Any family that makes less than $80,500 a year will get better rent control than they would from the state,” said Guggenheim attorney Richard Close.
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, nonpurchasing 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 rise 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.
Despite the better rent-control terms offered by the agreement, park residents were still worried about their loss of equity, something the development agreement did not address.
“You just robbed me of $175,000 of my investment,” said Rancho resident John Douglas. “Of course, we want to own our own homes, but not when it’s being rammed down our throat like this.”
Others inquired about a resident survey, a requirement for conversion. According to Giles, a survey was conducted in 2005 at the time of the conversion application, but most of the park residents boycotted it.
Residents of other mobile home parks also aired their concerns, worried that the precedent set by this decision would ripple out to their complexes.
“If you let this bully come in here and take all these people’s equity, it’s going to happen all over town,” said one commenter.
Yet other community members were incensed at the owners’ seeming reluctance to improve the park’s facilities: pipes, drains and hydrants that had not been upgraded since 1962.
“What is the owner doing with that money?” asked Rich Foster.
Still, as the City Council prepared to vote to move ahead with the agreement, members did wrap into their motion a requirement that Guggenheim pay for the fire-suppression upgrades recommended by the Fire Department instead of passing the costs on to the tenants. It’s not clear whether he will agree to such a requirement; but the answer will be clear at the council’s March 3 hearing.
Write to sfernandez@noozhawk.com