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VACANCY CONTROL IN MOBILE HOME PARKS

For those folks who follow mobile home rent control an important development occurred last week in what seems to be the never ending battle by park owners over the issue of “vacancy control”.  In a case out of the City of Goleta, the 9th Circuit Court of Appeals has granted what is called “en banc” review for a case that was decided in September, 2009.

First, a bit of background for those of you who aren’t rent control aficionados.  Vacancy control is the idea that when a controlled unit changes hands the rent stays under rent control and isn’t allowed to increase.  For years, owners of mobile home parks have raised a variety of arguments based on the assumption that rent control keeps rents artificially low and that vacancy control is a “taking” under the 5th Amendment of the U.S. Constitution.   The idea is that by not allowing rents to rise to what park owners argue is the “market rate”, vacancy control creates a “premium” value that transfers from the park owner to the owners of the mobile home, since the mobile homes are more valuable as a result of rent control.

This argument has been the subject of a series of federal court lawsuits since the late 1980s.  One case, Yee v Escondido, even made it all the way to the U.S. Supreme Court in 1992 on the theory that vacancy control constituted a “physical occupation” taking.  Ultimately, the Supreme Court unanimously disagreed ( http://openjurist.org/503/us/519).  After Yee, another line of cases was initially successful under a different taking theory in the case Cashman v. City of Cotati ( http://openjurist.org/374/f3d/887/cashman-v-city-of-cotati ).   It was ultimately undone, however, by another Supreme Court case that changed the underlying taking theory that the park owners relied on (see http://openjurist.org/415/f3d/1027/cashman-v-city-of-cotati).  The result was that the 9th Circuit reversed an earlier ruling in favor the park owners and ruled in favor of the City of Cotati.

Mobile home park owners, however, are not folks who give up easily and they have continued their assault on the constitutionality of vacancy control.  Once again they have achieved what may be just an interim success.  Last September in the case of Guggenheim v. City of Goleta, another panel of the 9th Circuit Court of Appeals bought the argument that vacancy control transfers a “premium” from the park owner to the owner of the rent controlled mobile home, and that it constitutes a taking.  Here’s a link to the decision, but be forewarned you need to allow a long time to read it because it’s 75 pages long!http://www.ca9.uscourts.gov/opinions/view_subpage.php?pk_id=0000009986

Last week, in a hopeful sign for folks disturbed by the ruling and its implications for the over 100 California cities and counties that have mobile home rent control, the 9th Circuit granted “en banc” review.   This means that a larger panel of 11 judges will now review the case.  So, stay tuned as the newest round of litigation over whether vacancy control is a “taking” plays out.  I’ll continue to report on this issue as information becomes available.

 

David H. Hirsch

dhirsch@carnaclaw.com

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