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HomeMy WebLinkAboutCC Minutes 2001-09-17SRCC Minutes (Regular) 09/17/2001 Page 1 IN THE COUNCIL CHAMBER OF THE CITY OF SAN RAFAEL, MONDAY, SEPTEMBER 17, 2001 AT 8:00 P.M. Regular Meeting: San Rafael City Council Also Present: Rod Gould, City Manager Gary T. Ragghianti, City Attorney Jeanne M. Leoncini, City Clerk CLOSED SESSION — CONFERENCE ROOM 201 — 5:00 PM: Present: Albert J. Boro, Mayor Cyr N. Miller, Vice -Mayor Paul M. Cohen, Councilmember Barbara Heller, Councilmember Gary 0. Phillips, Councilmember Absent: None Conference with Legal Counsel — Existing Litigation Government Code Section 54956.9(a) Case Name: MHC Financing, et al. v. City of San Rafael, et al. U.S. District Court, Northern Dist. of CA, Case No. C003785 City Attorney Gary Ragghianti announced that no reportable action was taken. In light of the tragic events to beset the United States in the past week, and the awful happenings to citizens, Mayor Boro invited all to rise and observe a moment of silence thinking good thoughts about those who died and also those who worked so hard on their behalf. The Pledge of Allegiance was recited and City Clerk, Jeanne Leoncini, led those attending the City Council Meeting in singing the Star-Spangled Banner. ORAL COMMUNICATIONS OF AN URGENCY NATURE: None. 8:00 PM Councilmember Miller moved and Councilmember Heller seconded, to approve the Consent Calendar, as follows: ITEM RECOMMENDED ACTION 2. Approval of Minutes of Regular Meeting of Monday, Minutes approved as submitted. August 20, 2001 (CC) 3. Acceptance of Affirmations of Confidentiality of Accepted Affirmations of Confidentiality Closed Sessions for: Ken Nordhoff, Asst. City of Closed Sessions executed by Ken Manager; Lydia Romero, Asst. to the City Manager; Nordhoff, Assistant City Manager, Lydia and Sharon Andrus, Risk Manager (CC) — Romero, Assistant to the City Manager File 9-1-2 and Sharon Andrus, Risk Manager. 4. Summary of Legislation Affecting San Rafael (CM) — Accepted staff report. File 116 x 9-1 5. Report on Bid Opening and Resolution Awarding Contract to Ghilotti Bros., Inc. in the Amount of $119,360 re Sidewalk Replacement Contract, Project No. 110-4421-723-8000 (Bid Opening held on Thursday, August 30, 2001) (PW) - File 4-1-539 x 11-7 6. Report on Bid Opening and Resolution Awarding Bid to Victory Chevrolet for 16 Miscellaneous Vehicles, in Amount of $432,387.98, Project No. 610-4426- 8712 (Bid Opening held on Thursday, September 6, 2001) (PW) — File 4-2-312 RESOLUTION NO. 10923 — RESOLUTION AWARDING CONTRACT TO GHILOTTI BROS., INC. IN THE AMOUNT OF $119,360.00 FOR "CITY OF SAN RAFAEL SIDEWALK REPLACEMENT CONTRACT" (lowest responsible bidder) RESOLUTION NO. 10924 — RESOLUTION AWARDING PURCHASE ORDER FOR MISCELLANEOUS VEHICLES TO VICTORY CHEVROLET, INC. IN THE AMOUNT OF $432,387.98 (only bidder) SRCC Minutes (Regular) 09/17/2001 Page 1 SRCC Minutes (Regular) 09/17/2001 Page 2 7. Resolution of Local Support Authorizing the Filing of RESOLUTION NO. 10925— an Application for Regional Improvement Program RESOLUTION OF LOCAL SUPPORT Funds for Pavement Rehabilitation of Various AUTHORIZING THE FILING OF AN Streets in San Rafael (PW) — File 11-15 x 9-3-40 APPLICATION FOR REGIONAL IMPROVEMENT PROGRAM FUNDS FOR PAVEMENT REHABILITATION OF VARIOUS STREETS IN SAN RAFAEL AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips and Mayor Boro NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None ABSTAINING: COUNCILMEMBERS: Phillips (from item #2 only, due to absence from meetin PUBLIC HEARING: 8. Public Hearing CONSIDERATION OF AMENDMENTS TO THE MOBILEHOME RENT CONTROL ORDINANCE AS REQUIRED BY THE SETTLEMENT AGREEMENT RESOLVING LITIGATION BETWEEN MANUFACTURED HOME COMMUNITIES (MHC) AND THE CITY OF SAN RAFAEL (CA) — FILE 3-2-97 x 13-7-1 Assistant City Attorney Gus Guinan reported Council had been provided with an extensive staff report which categorized the history of the Mobilehome Rent Control Ordinance since its inception in 1989 through its amendment in 1993, together with a 1994 lawsuit, the current lawsuit, initiated in the year 2000, and the 1999 Ordinance amendment. Mr. Guinan explained that in October 2000, MHC, Manufactured Home Communities, owner of Contempo Marin Mobilehome Park, sued the City. The legal challenges to the Ordinance have been explained extensively and as a result of these discussions over a period of almost eleven months, a tentative settlement agreement was reached. Paragraph 2.1 of the Settlement Agreement provides that, subject to approval by the City Council, and following notice and public hearing, the City will initiate specified amendments to its Mobilehome Rent Stabilization Ordinance. A copy of the proposed ordinance amendments, as directed by that settlement agreement, has been attached to the staff report this evening, together with a full copy of the settlement agreement itself. In particular, Mr. Guinan stated there are four amendments to the ordinance which are outlined on page 3 of the staff report. The remainder of the staff report addresses some of the legal and factual issues raised in public discussion by several residents of Contempo Marin Mobilehome Park over the last three City Council Meetings, and in numerous letters to Councilmembers, in addition to a meeting of some Councilmembers and legal staff with several representatives of the tenants group. Mr. Guinan indicated that should there be questions regarding the various aspects of the staff report and attached documents, staff would be happy to attempt to address them. Chris Taylor, Shute, Mihaly & Weinberger LLP, was present as outside counsel and was prepared to answer questions, also. Mayor Boro declared the public hearing opened and stated he had been furnished with a list of speakers whom he would call in the order presented; however, should others wish to speak, they were welcome to do so. Betty Mattea, President, Contempo Marin Homeowners Association, introduced Tom Davis, Contempo Marin homeowner and coordinator of this evening's efforts, who had prepared a summary of the homeowners' position, which she believed would add to Council's understanding of their concerns. She ceded the remainder of her time to Mr. Davis. Tom Davis recognized some distinguished visitors present, including the President of the Berkeley Rent Stabilization Board, Mr. Max Anderson. With Council's permission, he invited Mr. Anderson to briefly address the City Council. Max Anderson indicated his pleasure at being present and appreciated the opportunity to speak briefly. He stated he is Chair of the (Berkeley) Rent Stabilization Board and was accompanied this evening by other members of this Board, together with the past Chairperson. He stated they were present not only as elected officials, but as affordable housing advocates also, and they take a reasonable view on issues of this nature. Issues such as transportation, congestion and housing SRCC Minutes (Regular) 09/17/2001 Page 2 SRCC Minutes (Regular) 09/17/2001 Page 3 are very important for the entire region and they have a keen interest in endeavoring to advocate on behalf of those who desperately need to retain their affordable housing. In this particular case, Mr. Anderson stated the subject is an island of affordability in a sea fraught with the high waves of profiteering and real estate gouging. The modest seawall erected around the island has served to protect them over the years and he urged that it be preserved. Mr. Anderson produced a letter from a unanimous resolution passed by the Berkeley Rent Stabilization Board and requested permission to read it into the record: "Dear Honorable Mayor and Members of the City Council: At its meeting on September 6, 2001, the Berkeley Rent Stabilization Board unanimously voted to urge you not to ratify the settlement that the City of San Rafael has reached with Manufactured Homes Communities, Inc. By, in effect, imposing vacancy decontrol, this settlement will result in the ultimate removal of approximately 400 units of affordable housing from San Rafael. The Bay Area needs to increase, rather than decrease the availability of affordable housing in order to maintain the economic and cultural diversity which has so typified our wonderful and vibrant communities in the Bay Area. We hope our support will encourage you to continue your past commitment to affordable housing in your community, and stand up to those who see housing merely as a profit-making venture. Signed: Marjorie Gelb, Executive Director." Mr. Anderson urged the City Council to take a long, hard look at the impact. He noted many seniors in attendance and was aware of young couples with families in the mobilehome park, who rely upon this affordable housing to reside in the region. He urged rejection of the agreement in favor of seeking other means of protecting the tenants. Tom Davis, 22 Yosemite Road, stated this was the evening all were waiting for, both with dread and hope. Council's decision this evening would determine in large measure, the future of Contempo Marin, adding that his remarks also pertained to the R.V. Park of San Rafael. Having reviewed the staff report, he indicated he had many disagreements with the statements and conclusions therein; however, he was in complete agreement with the staff recommendation. Mr. Davis stated that in the final analysis, Mr. Guinan concludes that the decision to adopt or reject the proposed amendments to the Rent Stabilization Ordinance is up to the Council's discretion. The legal arguments are complicated and confusing, even to the judges who are making the decisions, and Roy Chernus, Legal Aid of Marin, would review some of these arguments. Mr. Davis stated that at this stage, there is virtually mutual agreement the City's Statute of Limitations defense is almost certain to prevail; however, the main task is not to guess the legal outcome, rather to decide the best policy for the people of San Rafael, including the residents of Contempo Marin, both present and future. Information would be presented clearly demonstrating that the present ordinance, including the vacancy control provision, is better for the entire City than any available alternative, including the amendments presented for consideration this evening. He indicated that several Contempo residents would reveal the significance of being able to own their own home and that Contempo Marin was the sole place in the county where they could realize that dream. To assist in understanding what their homeownership opportunity means to them, several residents volunteered to open their homes to Councilmembers; Mr. Cline would issue the invitation and give details. Mr. Davis explained that one of the questions of concern to the City Council is whether the current Rent Stabilization Ordinance makes housing more affordable for those of low and below average income. Richard Marcantonio, Marin Legal Aid, did some calculations, and as he was not in a position to be present this evening, Mr. Davis wished to ensure he received the deserved credit. Mr. Davis indicated that John Dohn, Mortgage Banker and Contempo Marin resident, when analyzing the calculations, would demonstrate that for a family of four earning what federal regulations categorize as a low income for this area, to purchase an average priced home at Contempo Marin, pay the average current rent, and service a typical mortgage, it would cost $2,500 per year less than renting from MHC at the $1,500 per month they intend to charge should the proposed amendments be adopted. Mr. Davis indicated that the present ordinance works as intended when passed in 1993. In fairness, Mr. Davis stated it must be acknowledged that since 1993, the prices of all homes in Marin have increased, and he questioned who should benefit from the increase in value, noting MHC inferred it should, being the property owner, and the increase is a premium. However, it should be borne in mind that MHC purchased its interest in Contempo Marin in 1995 with the existing ordinance in place and the property designated in the housing element of the General Plan as reserved for affordable housing. The price MHC paid for Contempo Marin was certainly affected because of those circumstances. Mr. Davis noted that the ordinance has always guaranteed the park owner a fair return on its investment and a means to apply for rent adjustments should it believe its return is inadequate, which he believed to be fair. Since purchasing the property, MHC SRCC Minutes (Regular) 09/17/2001 Page 3 SRCC Minutes (Regular) 09/17/2001 Page 4 has bought many individual mobile homes within the park and resold or replaced them with new manufactured homes, realizing a profit on each transaction. Therefore, when speaking of a premium, MHC has been the principal beneficiary. They have also acted as sales broker in the transfer of other homes, collecting larger commissions and making bigger profits because of the appreciation referred to as a premium. MHC now seeks to challenge and change the rules in the middle of the game and has threatened to file a succession of harassing lawsuits until it gets its way. Mr. Davis was reminded of the wolf in the children's story; however, San Rafael has a strong house and when considered carefully, MHC's case is mostly hot air. Mr. Davis reported that the selling price of a Contempo Marin home is influenced by many factors other than the site rent, including the size, age and condition of the home, improvements, additions and upgrades made by the homeowner, landscaping and other amenities not related to the site rent charged; therefore, the homeowner, not MHC, is entitled to benefit from those contributions to value. Within the park, site rents do not correlate with sales prices, as homes occupying sites with lower rents do not necessarily sell for higher prices. Mr. Davis reiterated that the homeowners looked forward to this evening with both dread and hope; he chose to be hopeful as over the past two months, Council had listened and given genuine consideration to the arguments. In this regard, he expressed appreciation, especially to Mayor Boro for his courtesy during emergency time in allowing their position to be presented in an effort to influence the decision-making process. He was also hopeful with the indication of a willingness to reconsider the original decision to settle the lawsuit on what can now be seen to be extremely unfavorable terms. The alternative proposed to the settlement by the homeowners is to defeat MHC in court, quickly and decisively. Information has been imparted, with more to come, which demonstrates that the present ordinance is sound public policy. Mr. Davis stated he believed the City Council would do what is right, and certainly what they deemed to be right for the entire City, including the homeowners of Contempo Marin, and he was placing his confidence in them. Roy Chernus, Executive Director of Legal Aid of Marin, stated that the City of San Rafael and the honorable Council deserved to be thanked for the wise public policy expressed in the present ordinance. They had nurtured a truly wonderful community within the City in which affordable housing for senior citizens and young families, as well as those in between, is maintained, allowing MHC to realize a fair return as a landlord while protecting the nest eggs of constituents. He repeated that Council deserved to be thanked. Mr. Chernus indicated that on one visit to Contempo Marin, the tangible pride can be felt. It is not merely a rental mobile home park with people coming and going at a fast clip, not caring about their neighbors, community or San Rafael; they care, and it shows, and the City Council deserves thanks for recognizing the value of this community. However, the proposed amendments do nothing to help a wonderful community which is part of a beautiful City, rather they hurt Contempo Marin and San Rafael. Mr. Chernus reported that Legal Aid of Marin had carefully reviewed the Agenda Report prepared by Mr. Ragghianti, City Attorney, and Mr. Guinan, Assistant City Attorney, and approved by Mr. Gould, City Manager, and strongly disagrees with regard to the viability of technical defenses. Legal Aid of Marin believes that the City of San Rafael would prevail on the Statute of Limitations grounds. The specter of other potential litigation as a reason for failing to litigate on that strong defense in this action is very difficult to understand; this is a case in which San Rafael's wise public policy is very evident for all to see. Similarly, Legal Aid strongly disagrees that the 91" Circuit opinion in Chevron vs. Cayetano (224 F.3d 1030) is truly as dire for San Rafael as the agenda report implies. This case does not state that if there is a premium, the ordinance constitutes an unconstitutional taking; it clearly states, however, that the ordinance will prevail if it substantially advances a legitimate public purpose. Mr. Chernus stated they could not believe that anyone visiting Contempo Marin could honestly say that San Rafael's policies had not substantially benefited the City. Not merely these residents, but the entire City of San Rafael is blessed by Contempo Marin. The so-called premium, stated Mr. Chernus, is the life's savings of constituents. MHC would contend that this community has merely invested in used personal property which invariably will lessen in value as it ages; however, in truth, this is equity, as in ownership of something valuable and in basic fairness. Mr. Chernus speculated that perhaps all the legal jargon was confusing a very simple proposition. San Rafael's policy is both wise and constitutional and MHC's opposition to it is based solely on a desire for more than a fair rate of return, which is both unfair and legally and morally wrong. These amendments would ultimately result in a very different Contempo Marin; instead of low and middle income residents holding on to a piece of the American dream and rewarding San Rafael for its SRCC Minutes (Regular) 09/17/2001 Page 4 SRCC Minutes (Regular) 09/17/2001 Page 5 wisdom with a vibrant, and warm community in its midst, San Rafael would have a group of residents who dared not invest in maintaining their units or landscape their grounds for fear of pouring yet additional money into something which could no longer be considered a viable investment. He urged the City Council to consider this carefully, and he questioned whether they would wish any neighborhood in San Rafael to be one in which its residents did not believe it merited their time, energy and hard earned cash. Mr. Chernus stated it was understood that the prospect of unending litigation against MHC is not a pleasant thought; however, the amendments are worse, especially given the merits of the current case, and Legal Aid strongly urged the City Council to have the courage to defend their wise public policies in the face of MHC's unfair onslaught. He stated they would work with the City to win this battle and urged them not to surrender or replace these wise decisions with unwise public policies which would hurt constituents and reward a greedy out of state corporation. Mr. Chernus requested that note be taken of the fact that he had chosen to avoid specifying their potential response should the amendments be passed and are praying it does not come to this. All could agree that vacancy rent control is sound public policy and he encouraged the City Council to do the right thing for San Rafael by refusing to pass these amendments, and by so doing, place everyone on the same side. John Dohn, 48 Yosemite Road, thanked the City Council for listening to the speakers. He stated he was aware that being business people, they had decisions to make at work and subsequently, are required to take Council decisions home, which he was aware could be difficult on occasion. Mr. Dohn reported that he is currently employed by the mortgage bank, Residential Mortgage Capital, in San Rafael, and has been in real estate finance for over eleven years. Mr. Dohn stated tonight, he would address the City Council concerning how under the current ordinance, it is more affordable to own a home in Contempo Marin rather than become a renter. Under the current ordinance, a homeowner can meet three important needs: 1. Shelter; 2. Savings through tax write-offs; and 3. Having an investment because of equity buildup, as a homeowner pays down his or her note. Under the proposed ordinance, a homeowner can realize only one of these, namely "Shelter." Mr. Dohn stated he would demonstrate that the total cost of meeting these three needs is less than the cost required for shelter only, under MHC's proposed ordinance. Mr. Dohn reported that the average home price in Contempo Marin is approximately $120,000, emphasizing that 50% of the prices fall below this number. With an 80% loan of $96,000, amortized over fifteen years at a 9.5% interest rate (Bank of Marin's current rate), the principal and interest payment would be approximately $1,000. The average rent space in Contempo Marin is $630; therefore, mortgage payment and rental space equal a combined payment of $1,630. MHC is proposing rent increases for vacancy decontrol of between $1,500 and $1,800. According to the latest Census Bureau statistics, the average income for a low-income family of 4 in Marin is between $55,000 and $60,000 annually. At an income of $57,000 per year, this would translate into approximately 33% of total income going to housing costs. In lending circles, this is considered affordable. Mr. Dohn indicated that the interest write-off over the first three years alone would be over $26,000, calculating to a tax savings of approximately $4,000 for a family in the 15% tax bracket. (He commented to Mr. Tom Davis that in their discussions, a 24% tax bracket was mentioned.) As illustrated, under the current ordinance, the cost of housing is lower than it would be should MHC be permitted to set rents for new buyers at what it declares to be the market rent; therefore, the current ordinance does achieve its purpose. It makes housing more affordable for those it was designed to protect. Michael Miley stated he would speak first on behalf of Stan Winston, a mobile home owner and resident at 251 Teton Court, Contempo Marin, who was unable to attend the meeting this evening for personal and religious reasons. He reported that he would read Stan's key arguments in favor of ground rent stabilization for mobile home communities, which show that mobile home technology, together with owner occupancy and ground -rent stabilization, equal more affordable housing, responsible citizens, better communal relations, a larger base and fewer social dysfunctions. Second, he was speaking for himself as a journalist interested in affordable housing solutions for California and also in support of Mr. Winston's arguments. As the former office manager for SRCC Minutes (Regular) 09/17/2001 Page 5 SRCC Minutes (Regular) 09/17/2001 Page 6 Network Financial, a mortgage brokerage firm headquartered in Chicago, he had researched housing cooperatives and other strategies for improving poorer urban neighborhoods on Chicago's south side. His research supports Mr. Winston's arguments in favor of ground rent stabilization for mobile home communities and shows that any scheme which gives lower income people a means of owning, and maintaining ownership in their homes, will improve that neighborhood by every known social indicator. Mr. Miley then read Mr. Stan Winston's arguments: "I wish to make two points clear, both mentioned in my speech here of September 4t". First: You have an opportunity today to begin a housing reform strategy in California that could potentially affect many small suburban communities throughout the state. This to extend rent stabilization on ground rent for mobile homes. Technologically, mobile homes are the best affordable alternative to other forms of housing. Ground rent stabilization gives mobile home owners an incentive to maintain and improve property, build up equity, and secure for themselves and the entire community, civic virtues that our free enterprise system needs in order to maintain a desirable quality of life. The above two factors, combined with mandatory owner -occupancy, have proven themselves to be the ideal solution to giving the community stability, affordable housing and a broader tax base. More homeowners, not less, is what Marin needs. You should go forward to set up plans for finding new mobile home locations to be developed by MHC or other developers with governmental encouragement and with guaranteed returns under a ground -rent stabilization system and with the provision for mandatory owner -occupancy. This avoids the known problems of standard multiple - unit absentee -landlordism that the term "rent control" most often implies. Ground -rent stabilization, as described here, is not standard rent control. It has different goals and consequences. In addition to providing more affordable housing units, it turns tenants into owner occupants who have the right to designate their successor. What you propose is regressive: your act will turn owners into tenants, bankrupting many, especially the elderly who have sunk all their assets into their homes in expectation of a retirement nest -egg. It will remove taxpayers not add any; I will not pay taxes as levied if my property is worthless. Will MHC pay you a tax on its newly acquired wealth? Don't count on it. Second: MHC's lawsuit is a paper tiger. Rent control and rent stabilization laws have been consistently maintained in the courts for the last fifty years. In the case of mobile homes, you have an even better case because the property rights in equity (largely developed by the ground -rent tenants) have been recognized de facto and de jure by the taxing authorities, by the banks lending money on equity security, and by the insurance companies insuring the equity property. Furthermore, you have enormous leverage and can easily show that the social and civic values of home -ownership, combined with owner -occupancy and rent stabilization, are legitimate objectives in our society. Lastly, President Bush has just set up a new agency to screen all Federal Court actions against localities by individuals and corporations. He has put the case of discouraging such actions quite succinctly; "The localities are better judges and have better knowledge of the needs of their communities than the Federal Courts or regulators." Today is a great opportunity for you to put Marin on the national map as forward-looking advocates of something workable, of social value and necessary to help solve the housing shortage. Don't let the cliche `rent control' and the business community's knee-jerk reactions against it put you off. Ground -rent stabilization is not standard rent control. Combined with owner -occupancy and equity protection, it is your best bet for coping with housing shortages and speculative price rises in suburban communities. It retains and extends the advantages of free enterprise to more people and broadens the tax base. Go forward with ground -rent stabilization. Help create new affordable housing, but don't destroy the old." In presenting his own arguments in favor of ground -rent stabilization for San Rafael's manufactured home communities, Mr. Miley stated his comments were based upon first-hand research into housing cooperatives, conducted in 1983 and 1984 in Chicago on behalf of Network Financial, a mortgage broker, of which he was the office manager. Over a period of several months, he examined several cooperative housing projects conducted by the South Shore Bank and interviewed representatives from these communities. The purpose of the research was: 1. To examine what strategies already existed to create home ownership opportunities for low- income people and to ascertain if Network Financial might replicate them. 2. To determine the effects on neighborhoods of replacing absentee landlord -type rental properties by resident -owned properties. Mr. Miley reported that South Shore had devised various low-interest mortgage programs and SRCC Minutes (Regular) 09/17/2001 Page 6 SRCC Minutes (Regular) 09/17/2001 Page 7 sweat -equity projects which enabled prospective owners to renovate several buildings purchased by South Shore Bank on the south side of Chicago, and to eventually buy them. The result was buildings and land owned by the non-profit cooperatives, the legal entity of the resident owners, where each occupant owned his or her own unit. The mortgage for each cooperative was a long- term, low-interest fixed rate mortgage. South Shore proved that buildings with multiple units could be cooperatively owned, to the benefit of all its residents, and that this ownership could be won over time, using a combination of a mortgage with sweat equity. Mr. Miley indicated that his on-site inspections proved that cooperative housing solved many of the neighborhood problems which were endemic on the south side of Chicago. In interviews with cooperative representatives, the contrast between these and other neighborhoods was clear; in places where people did not own their homes, there was no pride of place. Buildings were run- down and there was a higher incidence of crime. In the cooperative neighborhoods where people owned their property, the buildings were beautiful, the neighborhoods were clean, the units were well kept, and people were more secure and happy. In short, he reported, South Shore's strategy provided affordable housing to low-income people, an equity incentive for improving the property (since the tenants were the owners, not absentee landlords), and created true communities, with pride of ownership and an increase in security for all its members. The projects showed that home ownership, even for those on low-income, was the cornerstone of a good neighborhood, where members upheld the civic virtues valued by all. Regarding 2001 in San Rafael, Mr. Miley stated he would not repeat Mr. Winston's arguments on the virtues of home ownership in manufactured home communities, nor how a lack of ground -rent stabilization threatens those communities. He viewed ground rent stabilization laws as an absolute bottom line for such communities if they are to exist at all when the land itself is owned by an absentee corporation. He proposed another possibility after the return of the ground stabilization rule; a new scheme of ownership, where the City of San Rafael itself would be the owner of the land, in effect, becoming the "cooperative owner" representing the manufactured home communities within its boundaries. Mr. Miley reported that he had spoken today with Philip Williams at the Fannie Mae Partnership office, (415-277-3360) who informed him of a program named American Communities Fund, where money could possibly be loaned to the City to purchase the land from MHC. This loan would be required to be repaid in five to seven years and revenues from the ground rent in the communities could be applied to the loan, together with other schemes. This possibility could be leveraged to MHC as a friendlier alternative than the prospect of asserting eminent domain over their claim to the land; however, it would express the same goal, controlling the land of the people it most affects. It would be in the interest of San Rafael to maintain and increase the availability of affordable housing in the City just as it is in the interests of the residents of the manufactured home communities; however, it may also be in the interest of San Rafael not to be manipulated by a faceless absentee corporate landlord, and to own the land itself. Mr. Miley indicated that there may also be other cooperative ownership strategies where the communities themselves would own their land, however, this needs exploration. Mr. Miley stated the bottom line is that ground rent stabilization and vacancy control must be maintained in San Rafael and in the manufactured home communities it affects. Ground rent stabilization ensures that equity is maintained and home ownership, as his research demonstrates, is the cornerstone of responsible citizens, better communities and fewer social dysfunctions. Ann Rahe, Registered Nurse, 41 Yosemite Road, stated her message was very simple and personal. She urged the City Council to maintain vacancy control in Contempo Marin. Ms. Rahe explained that two years ago, having rented for many years, she took most of her savings and set out to purchase her own home. As conventional housing was not an option, due to the expense, she finally found a home she could afford in the Contempo Marin Mobilehome Park, a family community of modestly priced alternative housing possibilities, where mobile homes are owner occupied and the spaces on which they sit are rented from the park owner, Manufactured Home Communities, Inc. (MHC). Ms. Rahe stated that even with the yearly increasing rent, as governed by the current rent control ordinance, she felt confident she was making a good investment; at least part of her monthly housing expense, excluding the space rent, would go toward building home equity, and she could expect a reasonable return on her investment should she need or want to sell her mobile home in the future. The specter of possible vacancy rent decontrol appeared as a result of the lawsuit by MHC against the City of San Rafael, and Ms. Rahe stated that should this be instituted, she and all current Contempo Marin homeowners, would instantly lose any equity accumulated in their homes, with the result that her home will no longer be an investment. In effect, her reasonable investment expectations completely disappear. In addition to the loss of equity for current homeowners, vacancy rent decontrol would prevent future homebuyers, such as she, from ever again having the SRCC Minutes (Regular) 09/17/2001 Page 7 SRCC Minutes (Regular) 09/17/2001 Page 8 opportunity for modestly priced home ownership in Contempo Marin. She questioned how anyone with a modest income could support the purchase and upkeep of a mobile home in Contempo Marin while also paying the huge $1,500-$1,800 monthly space rents proposed by the Manufactured Home Communities. She issued a plea to the City Council to preserve the value of her home and the 395 modestly priced housing units in Contempo Marin for future homeowners, by allowing vacancy rent control to remain in place. Felix Braendel indicated he had spoken before the City Council in August, 2001. He understood why the City Council was tempted to grant MHC their request: they are big, rich and mean, and to believe this was protecting the remainder of San Rafael was bad politics for all. Mr. Braendel used the analogy of Neville Chamberlain going to Munich in 1936 with the best of intentions, believing he could purchase peace from Hitler by giving him Czechoslovakia; however, events proved him spectacularly incorrect. The sacrifice of Czechoslovakia left a stain on Chamberlain's career and his name, which endures. He requested Council consider how appeasing MHC will appear to the other residents of San Rafael, people who value the equity in their homes almost as much as they do their children. They are aware their equity is not at risk by what is happening at Contempo Marin; however, the apparent readiness to relinquish Contempo homeowners' equity leaves them uneasy, and it should. Councilmembers would be compared unfavorably with officials in other California cities, e.g. Palo Alto, Cotati and Buenaventura, who did not sway under pressure from MHC. This would be deemed a sign of weakness, which is not an appealing quality in a candidate for election. Mr. Braendel commented that this need not, or will not happen, if it is remembered that Councilmembers are the residents' representatives, with both sets of interests intertwined. He urged that they not diminish themselves by abandoning the homeowners. Daniel Miller stated that he and his wife had been loyal residents of San Rafael since 1984 and had moved to Contempo Marin in 1990. He explained that having had their first child in 1989, they decided to house shop; mortgage payments on a home in Marin were high, but doable. Acquiring a 10% down payment was the problem; however, they had just enough for a down payment on a home in Contempo Marin. Mr. Miller reported that Contempo Marin is a nice place to raise children; his children have their own rooms and a backyard in which to play. It is a great place for families and is a relatively peaceful place, with not a lot for parents to worry about. He stated that having invested a lot of time and money in their home, MHC is attempting to negate this and had it not been for Contempo Marin, they would have been unable to live in Marin. Mr. Miller stated that the City of San Rafael must realize it needs these residents; people must work in Marin and ideally should also live in Marin. Affordable housing is not only needed but will some day be demanded. The Bay Area as a whole, will reach that proverbial rock and a hard place and someone must take the lead on this issue. Mr. Miller indicated that by allowing MHC to do this, San Rafael has indeed become a hard place. Coleman Persily, Vice President, Golden State Mobile Homeowners League, stated he worked for the Housing Authority as a volunteer, answering the hotline. He received a telephone call last Friday with a request for $1,625 from the Housing Authority. In conversation, he ascertained this caller lives in Contempo Marin, having moved in, through the management, to a house given to her from management. She was required to pay $1,625 rent and a similar amount as a deposit. Having paid the first month, she did not have the $1,625 deposit, hence her request. This, he stated, is an example of MHC's charges. He was not aware of what action the Housing Authority would take. Mr. Persily indicated he believed the City Council wished to do the right thing for the residents of Contempo Marin. Both Council and the City Attorneys were aware MHC had gone beyond the Statute of Limitations in its fight against the Mobilehome Ordinance. In DeAnza vs. City of Santa Cruz, the case went to the Ninth Circuit Court of Appeals (Federal Court) which sustained the decision of the lower Court in ruling that the park owner was too late in filing for the elimination of vacancy control. He suggested postponing the decision and attempting to persuade the Court to follow the Ninth Circuit Court of Appeals decision and throw out the case. This, he stated, happened both in DeAnza and LeValle. Mr. Persily read a paragraph from the Ninth Circuit Court of Appeals, having reminded Council this case had been in the District Court. SRCC Minutes (Regular) 09/17/2001 Page 8 SRCC Minutes (Regular) 09/17/2001 Page 9 "On appeal, the Ninth Circuit Court affirmed the District Court ruling that the park owners' time to sue begins to run when the Ordinance is enacted (this, he stated is where the attorneys are having problems) and not when other ordinance sections are changed." In essence, this means that MHC is endeavoring to change a piece of the ordinance. He hoped the attorneys would adhere to the law. Pat Littman, addressing the City Council, stated a week had not even passed since the recent shocking events. These events served as a catalyst for much reflection in many, the predominant element for her being the stark imperative for doing what is right, and continuing to do so. MHC, she stated, is attacking the City Government of San Rafael and the long-standing resident community of Contempo Marin. The defendants (victims) are all a part of the City of San Rafael and it is imperative that the fair and correct thing be done. The residents have a superior claim over MHC as they are committed to living there, caring about their homes, the community and the City in which they live. Ms. Littman stated this is her sole opportunity to own a home in this area. She and her family moved to Contempo Marin almost three years ago, subsequent to an exhaustive and disheartening search in the rental market. She was willing to move and invest here and commit herself here, based on the City's obligation and commitment to affordable housing. She now has a feeling of lost opportunity, in that the City of San Rafael is not adhering to its commitment to the affordable housing quota, as required by the state. To arbitrarily infer that this will be made up with other affordable housing elsewhere, is an atrocious disregard. The affordable housing is in place now with the residents of Contempo Marin, who are already committed. As with many other residents of Contempo Marin, Ms. Littman stated her investment nest egg is her equity solely, and is what she can use for her children at some point in the future. She equated the proposals by the City of San Rafael, under the leadership of MHC, to stealing her equity. Ms. Littman stated that MHC purchased Contempo Marin with the understanding that the housing falls within a low-income ordinance. This is a company which netted $232.7 -million last year, at an 8.2% increase in sales growth, and Ms. Littman questioned how MHC's s need for fair market value on its property was in any way more valuable than the residents' need for fair market value on their homes. An indivisible partnership exists between MHC and the residents of Contempo Marin, and it needs to be recognized as such — the resident owns the house with MHC owning the land and one without the other diminished the value. Ms. Littman indicated that as owners, at their own expense, they have beautified their property, contributing time, money, creativity, care, and a sense of pride, rendering the plot of land a thousand -fold more beautiful and valuable. As there is no dissolution of this partnership, MHC's need for a fair market value which would cripple that of the residents is a gross injustice and Ms. Littman urged Mayor Boro and the Councilmembers not to cave in to injustice. Raylene Dohn stated she had been a Contempo Marin homeowner for over nine years. She urged the City Council to stand up for what is right. As constituents, and the individuals who share the community, they were present to support the City in doing what is honorable and necessary. She recalled witnessing the devastating effects of fear in the past week and people rising to the occasion by demonstrating enormous integrity and character in doing what is best for the wellbeing of the human family. She inquired if Council could move beyond fear and do what is best for those living in Contempo Marin, as well as other San Rafael communities, dealing with greed. Ms. Dohn believed the City Council was aware that MHC was not demonstrating itself to be the type of corporate citizen that the San Rafael community as a whole, should cower to or tolerate. She thanked each Councilmember for listening with their hearts. Jim Cline thanked the City Council for affording them the opportunity to speak at length in previous Council meetings. He and his wife live at 37 Yosemite Road and recalled mentioning at a prior meeting that their home was up for sale due to the proposed rent decontrol. He reported that they were unable to sell what has been described as a "top of the line home", despite many visitors and favorable comments. It has been established that there are no windfall profits and these proposed changes will have a very derogatory effect on their early retirement plans, due to a lack of much, if any equity, at this time or in the near future. Mr. Cline shared a story of another "life in flux" because of the agreement with MHC: His 76 year old neighbor, Isabelle, holds a Ph.D., is an accomplished author, world traveler and lecturer on the topic of self-help and has also been a community volunteer. She and her ex-husband, a World War II Aviator, also living in the park, had both planned to live out their days in Contempo Marin. This year, however, Isabelle's plans were changed by a heart attack and other health problems, leaving her homebound, when not in the hospital, and under expensive home care and medication. Subsequent to her health declining and prior to this notice of possible ordinance change, she SRCC Minutes (Regular) 09/17/2001 Page 9 SRCC Minutes (Regular) 09/17/2001 Page 10 thought to sell her home and use her equity to pay for a move to an assisted -care facility. Now, she is unsure if she has any equity and needs assistance from her church, friends, relatives and any other resource. Medicare and SST (Social Security Insurance) do not cover her present space rent and Mr. Cline emphasized how unsettling these changes can be to a fiercely independent and formerly self-sufficient woman. Mr. Cline stated that many in Contempo Marin are willing to open their homes to the City Council and he invited them to view their wide range of starter homes, re -modeled homes and those owned by single locally employed parents and business owners. Many would not have an opportunity for home ownership in Marin were it not for pride, sweat -equity and the affordable alternative home ownership of Contempo Marin. He invited Councilmembers to contact Dorothy Hallett, 472-3751, to arrange visits. Mr. Cline thanked the Council for their patience and considerable efforts on their behalf, and he requested a continuance of these efforts to re -consider the signing of the agreement with MHC. Alvin Gabler stated he was in possession of a copy of an escrow cancellation document, a direct consequence of the City's agreement with MHC. Others in Contempo Marin are in possession of similar papers. He commented that MHC is a bully, who should be stood up to rather than appeased; they would not be content until they break the Contempo Homeowners and bend the City Council to their will. This has nothing to do with fairness, justice or the law, rather it has everything to do with naked, greedy power and the bottom line. On behalf of the Contempo Homeowners and the residents of San Rafael, Mr. Gabler requested that Council stand up to this corporation, joining fellow City Councilmembers throughout the State of California, in retaining affordable housing ordinances for all, as anything else is an act of moral cowardice. Jerry Frate, having written a wonderful speech for this evening, stated that on receiving the staff report, he was obliged to respond to it, saving the speech for another day. He stated that the general tone of the staff report is that they at Contempo Marin are misguided whiners who should feel grateful for the first cup of soup and had better watch out should they require the remainder of the ordinance to stay in effect. The section which reminded him of "Dickens" is on page 2 of staff's responses, which states: "The City has not guaranteed that vacancy control, or any of its regulations, will be in place permanently", and he questioned if all ordinances were so temporary, citing those building in-law units onto their homes and investing money in their property, based on this City Ordinance. Should staff recommend dispensing with the ordinance allowing in-law units, Mr. Frate questioned how long it would take the City Council to inform them this was a bad idea. He speculated that there must be a few more examples of ordinances in place which people in San Rafael had benefited from, not just the in-law ordinance, or perhaps, staff did not believe the vacancy control ordinance should be permanent. Mr. Frate stated that the staff response pertaining to affordable housing is suspect in that it infers there are few low income units in the park, while some units fall within the City's definition of moderate housing; however, in actual fact, most houses in the park are moderate income. Having asked Dick Bornholdt, the City's Housing Consultant, whether there remained affordable housing at Contempo Marin using a typical sale, as per information from Barbara Annis, real estate agent and resident of the park, Mr. Frate received confirmation affirming moderate -income housing. According to the 2001 Marin County income limits, Contempo Marin homes can sell for $86,000 for a family of two and upwards of $150,000 for a family of four. Ms. Annis, who accounts for 80% of the non -MHC sales, inferred that the average sale of any non -MHC home in this park is approximately $125,000. This figure is at the center of the 2-4 person family sales bracket; therefore, moderate affordable housing exists in Contempo Marin and to replace the word "moderate" with "workforce housing" would give a good indication of those residing there. Mr. Frate indicated that the next sentence by staff in the same paragraph states "Rent stabilization would remain in effect under the proposed amendments, and thus new residents would continue to have the benefit of predictability in their future housing costs." Mr. Frate agreed it would be predictable in that MHC would raise the rents more than double what they are now, and he questioned whether staff believed this to be a good idea. To consider what the mobilehome park would be like in the future without vacancy control, Mr. Frate stated that MHC would have total control over the rent assigned to lots. Should his house be for sale, MHC could assign a $3,000 per month rent for this lot and a $1,500 per month rent for one of their own and he questioned which one a prospective purchaser would choose. Should he be unable to sell his home, he wondered what might prevent MHC from offering 30¢ on the dollar to purchase the home, subsequently, reselling it with a lower rent, as they having total control in determining rental amounts. MHC rents the land, sells homes on the land, polices the land - in the SRCC Minutes (Regular) 09/17/2001 Page 10 SRCC Minutes (Regular) 09/17/2001 Page 11 form of evictions - and on some rare days, even maintains the land; therefore, with vacancy decontrol, MHC would have too much power over residents' lives and homes. The third item in the staff responses Mr. Frate wished to address concerned the assumption that homeowners receive a large premium when selling their homes. Staff uses MHC's argument that a new buyer pays market price for the new home; however, these so-called market prices are really moderate -income prices, as has been shown. The only non -affordable houses selling in the park are the mobile castles MHC moves in having bought up their smaller affordable homes. Mr. Frate stated that affordable homes for sale, as administered by Marin County, can realize a profit of approximately 5%; his initial research demonstrates this is approximately what a person realizes at Contempo Marin when selling, and staff evidently believes that 5% is a windfall profit. Another section alludes to the fact that purchasing the park from MHC was not financially feasible; however, Ecumenical Housing would like to buy it, which was something to reflect on. In conclusion, Mr. Frate stated that pursuant to reading the staff report, he was amazed at the lack of reference to the fact that Contempo Marin Mobilehome Park is workforce housing and the City should fight to preserve it. Nor was their mention of those having lived in the park for the past 25 years who are now facing the possibility of losing all their equity, or the trouble MHC has been to them and the City over the years. There was no staff recommendation to the City Council to fight to save these homes, which he trusted they would do. Jan Koprowski, stated she had lived at 328 Acadia, Contempo Marin, for approximately five and one half years. She has been employed in health services and the arts all her working life, primarily working for educational and community non-profit groups where there is not a lot of money to be made. She believed a community benefits from having good healthcare for those who need and cannot afford it, and also by having arts for people's spirits. These positions are critical for a safe and healthy quality of life, both physically and spiritually. Ms. Koprowski stated she is often in downtown San Rafael and has become very aware of the plentiful hiring signs, whether it be restaurants, businesses, clinics, retailers, doctors' offices, almost every concern in the area, and this demonstrates how difficult it is to acquire qualified, or any type of help. This, she stated, is in large part due to the great difficulty in locating affordable residences in the area. Had she not purchased in Contempo Marin several years ago, she could not afford to relocate to this area today and be a contributing member of the community, and she was aware of not being alone in this position. She urged the City Council to consider what would be lost in a matter of a few years should they vote to rescind the vacancy control ordinance. This area is already very needy of affordable housing and to lose the homes in Contempo would be very significant to those contributing, worthwhile members of the community. She requested that San Rafael not be allowed to become another elitist community where those caring for the elderly and servicing citizens must come a long distance to work. Norma Churchill expressed appreciation to all members of the Council for the hard work and careful attention paid to them during these meetings. Residing at 9 Yosemite Road, she indicated she had spoken on a previous occasion of the hope of inheriting the fruit of their ancestors' labor and the fear of it being consumed by MHC. A resident attending the previous Council Meeting made the following remarks and Ms. Churchill sought permission to re -read them in the resident's absence: "Questions asked of the City Council by a Contempo Marin resident: Would you want to buy a home in Contempo Marin if you had not only to make a mortgage payment each and every month, but you also had to pay $1,500 a month space rent, without any form of rent control? Are you taking into full consideration the fact that we are homeowners with equity, not just tenants? Are you willing to do what it takes to work with your constituents in Contempo Marin, or are you going to just let our equity go down the drain into a big corporation in Chicago?" Ms. Churchill stated this resident had also addressed the fact that not only do they pay monthly space rent, many pay monthly homeowners insurance and home loans, together with maintenance and improvement costs, and newer homes pay County taxes, which is a further $100 per month approximately. SRCC Minutes (Regular) 09/17/2001 Page 11 SRCC Minutes (Regular) 09/17/2001 Page 12 In conclusion, she stated it appeared they were picking on City Manager Gould; however, he made a remark printed in the Marin Independent Journal, to the effect that rent control had unintended consequences. Ms. Churchill stated that as they have discovered at Contempo Marin, unintended consequences have been good; they have discovered a community united, have joined old, young and in between and found hard work, inspiration and true grit. They applaud such unintended consequences. Brian Eagleson stated he and partner, Sarah reside at 36 Yosemite. Native Americans believe that feathers from sacred birds have special powers and he displayed a feather of a great blue Heron, a member of the Egret family, considered to be peacemakers bringing peace, stability, harmony and good luck. He thanked the members of the City Council for their patience this evening and although having the constitutional right to stand before them and speak, it is not a constitutional guarantee they have to listen so attentively. He also expressed thanks for their community service, stating there are not a lot of people who would be willing to take these positions, especially this evening. He stated he had intended to speak in detail concerning his and Sarah's hardships in the past; however, since realizing so many of their neighbors were in much worse situations than they, he was too embarrassed to do so. Instead he would address what he was feeling and he humbly requested that close attention be paid to his remarks. Mr. Eagleson stated he was scared and losing his faith in this system and this was no reflection of last week's sad events. In reciting the Pledge of Allegiance this evening, he stated he was unable to say the last few words "justice for all". Being almost fifty-two years old, he had always attempted to do the right thing; he earned a professional degree, votes and pays taxes and based on his knowledge of corporate welfare, it appeared he was paying more than his share of taxes. Mr. Eagleson reported he had served his country at a time when it was not popular to do so, and his only regret was that he did not protest more. Being a Physical Therapist, he stated he is a helper and healer and has spent the past twenty-three years helping people, literally, to get back on their feet, and now, he himself, is in need of help. To use an analogy, he recalled the film "It's a Wonderful Life", which starred Jimmy Stewart, and stated the City was fighting a "Potter". MHC is not a good corporate citizen, as they commit the sin which Mahatma Ghandi called commerce without morality. In the film in question, Jimmy Stewart is saved in the end, not by a bureaucracy, rather by his friends and neighbors and this is what he was asking of Council this evening. In conclusion, Mr. Eagleson stated J.L. Chestnut has been fighting for the civil rights of Americans for over forty-three years. As the first and only African-American lawyer in Selma, Alabama in 1958, he knows what it means to face a formidable foe and quoting Mr. Chestnut, Mr. Eagleson stated "I have found that if you are right, if you are determined and if you are dedicated, then nothing can stop you." He urged the City Council to help the homeowners in Contempo Marin. Paul Sesto, 305 Zion Court, a twenty-five year resident, concurred with the sentiments of previous speakers and stated that no one gets rich at Contempo Marin except the property owners. Until July of this year, he worked for Safeway and was aware of the "For Hire" Notices seeking employees to fill a broad specter of professional and non-professional positions. From January 1 through July 3, 2001, at Safeway in Northgate as a Department Manager, he experienced a turnover of sixteen employees, all of whom were Marin County residents and some of whom moved out of state. Those hired reside in the East Bay; however, he believed Marin workers should reside in Marin as they are closest in time of need. Jeanmarie Grieco -Kolb, 28 Yosemite Road, stated she came to Contempo Marin from the East Coast as a result of a divorce, along with her three children. Having tried renting, she stated she borrowed from her retirement fund, saved and purchased a home in Contempo Marin, which she meticulously maintained and upgraded. Working hard and going to school, she procured a better position and had the opportunity to purchase a better home. She put her Contempo Marin home up for sale at a price of $135,000, reduced it to $110,000, and finally received an offer of $98,000 which she accepted. Unfortunately, however, MHC chose to randomly decide they would enforce the community rules; the potential purchasers, having pets, were informed they could not move in; hence she lost her contract. Having invested her life's savings on the new house, should she not be in a position to raise the additional funds to continue with the purchase, she will lose that house, along with her $10,000 investment. She received an offer of $55,000 recently, with the inference that once vacancy decontrol goes into effect, it will not be worth much more. This she refused, as it was insufficient to meet her obligations. SRCC Minutes (Regular) 09/17/2001 Page 12 SRCC Minutes (Regular) 09/17/2001 Page 13 Ms. Grieco -Kolb stated MHC was holding her hostage and affecting her life considerably. She purchased in Contempo Marin as it was the only affordable place for her family at the time. Working hard, she desires something better for her family and requested that the City Council seriously consider justice for those in Contempo Marin. Matt Forbush, resident Contempo Marin, stated he had worked hard to attempt to improve the property he owns. He was reminded of our founding fathers when writing the Declaration of Independence, to the effect that property and civil rights were endowed by the creator. Mr. Forbush believed this to be true and the residents of San Rafael had elected the City Council, entrusting them to protect those rights. The founding fathers were smart enough to know that entities such as MHC would try to impinge upon citizens' rights and were aware of the necessity to establish a form of government with elected officials to protect those rights. Peter Holleran, 242 Teton Court, stated that over the course of the past two months he believed that many of the residents had somewhat taken on a role akin to that of the writers of the federalist papers during the early days of the United States. He stated he had sequentially presented the Council and City Attorneys with a series of letters, from a layman's point of view, regarding the situation involving Contempo, in an effort to attempt to influence them to hold to their already well thought out course of rent control and vacancy control for mobile homes, and not to be diverted by well financed threats from the corporate park owner, MHC. Mr. Holleran apologized for not having a prepared copy of his remarks. In a letter of July 27, 2001, Mr. Holleran stated he requested the City consider numerous equitable arguments concerning the unique nature of the mobile home park owner relationship. For instance, both MHC and the homeowners at Contempo in aggregate, have approximately equal investments, and probably the combined investments of the homeowners is greater than that of MHC, yet the park owner, should vacancy control not be upheld, has an unfair advantage in being able to control the equitable stake of the homeowners through his sole power to set the rate of rent, there being an inverse relationship between rent and mobile home values, and also to determine exactly what a market rate rent is. He stated that in most cases, market rate will simply be whatever the park owner desires it to be. Mr. Holleran indicated that residents at Contempo are homeowners, not merely renters or tenants. While the overall housing market exerts a natural control over the ability of, for instance, an apartment owner to charge excessive rent, as evidenced in the case of current San Francisco rents declining, without vacancy control, the mobilehome park owner is under no such restraint; he can charge whatever he likes, regardless of the condition of the housing market, and allow the homeowner to suffer the downfall, in the form of a lower value for his house. The rent goes up in either case, which is not fair. Mr. Holleran argued that without vacancy control, there would be no way to determine a true value for a home and all purchase contracts, past and future, would be undermined. He stated that for this and other reasons, municipalities under the full power of the state, have enacted vacancy control. In writing the letters, Mr. Holleran stated that while lacking the specific intention, he appeared to arrive at conclusions similar to those which the City of Montclair advanced in a report where they justified their enactment of vacancy control. Having studied the matter, they concluded that their rent control ordinance had lost its effectiveness in fulfilling its stated legislative purpose of promoting affordable housing because: The limitations on the ability of homeowners to sell their homes due to much higher rents upon sale resulted in not only a loss of homeowner equity, but also in a higher number of owners abandoning their homes, causing by default, an increasing number of homes to end up in the hands of the park owner. This has also happened and will continue to happen at Contempo Marin; 2. The park owners had an unfair competitive advantage in being able to both sell homes themselves and give rent preferences to those buying directly from them. This, too, is the case at Contempo Marin.; 3. The low mobility of the so-called mobile homes made the cost of moving them prohibitive and therefore, some further protection was needed to protect the homeowner. Mr. Holleran indicated that the City of San Rafael went through similar well -considered deliberations some years ago, to arrive at their decision that vacancy control is necessary. The City should not abandon that decision now. SRCC Minutes (Regular) 09/17/2001 Page 13 SRCC Minutes (Regular) 09/17/2001 Page 14 On August 1" and August 12t", Mr. Holleran reported he sent letters to the Council addressing, among other things, the fact that under the Statute of Limitations for challenging the municipal ordinance, MHC was forever barred from so challenging the 1993 rent control ordinance. He stated that the ordinance was in place when MHC purchased the park and they were aware of what this meant. They tacitly acknowledged they could not challenge it, as pursuant to one year having elapsed, they had not offered a challenge. Indeed, only after six years had passed did they decide to mount a nationwide campaign to challenge such ordinances in order to increase corporate profits beyond what is fair and reasonable. Mr. Holleran argued that City Attorney Ragghianti's assertion, as quoted in the Marin Independent Journal, that the Statute of Limitations was somehow reset by the Council's amendments to the ordinance in 1999, and that now the entire ordinance was open to challenge, whereas before the amendments were enacted, it was not challengeable, just seemed unreasonable. He noted from Attachment #7, which he distributed, that MHC could always use further as applied challenges and stated that while anyone could try anything, he questioned why a statute was necessary if one is worried about all the possible exceptions. Mr. Holleran stated that to be afraid of the trend of federal courts, or any and all possible future legal challenges, is to cave in to fear. It turns out, however, that nowhere is it implied or stated that the original 1993 ordinance which enacted vacancy control, is challengeable because of amendments enacted in 1999, and nowhere in MHC's lawsuit does it mention that ordinance as creating an unconstitutional taking of their property. Their major stated complaints in the lawsuit concern the recent amendments to the ordinance, although through clever language and references to the Fifth Amendment in the Richardson case, they attempt to sneak in a challenge to the overall ordinance itself. He stated they can challenge the 1999 amendments under the Statute of Limitations; however, not the entire ordinance. They can attempt to argue in court, for instance, that the amendment modifying the CPI rent increase to only 75% of the CPI created a taking of their property equal to 25% of the CPI. In his case, Mr. Holleran stated this would amount to $4.00 per month, which he could live with losing; however, he could not live with losing half or all of his home's equity, neither could anyone else, nor should they — not in San Rafael and not in America. He stated the Statute of Limitations is clearly the first line of defense for the City against MHC; it should be defended vigorously, which will render mute the entire lawsuit MHC has threatened to pursue. In a letter of August 21St, entitled "MHC's Real Rate of Return", Mr. Holleran stated he addresses the issue of fair return and demonstrates, even to his own amazement, how MHC's real return on their investment is far in excess of what is historically considered fair, and actually, approximates 100% to 150% per year, increasing in perpetuity according to the CPI allowance. Whereas, the average homeowner's return, even after factoring out the enormous interest and rent paid as his cost of living, has been in the neighborhood of 4% to 12% annually, and, in fact, decreases as the investment is paid down. Mr. Holleran stated that in MHC's case, the simple math behind a conventional 10% down payment on their $18 -million purchase price, with the ongoing receipt of $3 -million per year rent, would make for an annual return of 167%, minus their expenses. He noted that under any possible variation in this calculation, their return is far more than the 8% to 10% historically considered fair, and which should be sufficient to satisfy any court when considering whether there had been an unconstitutional taking of property. He stated there is, in fact, no taking under the law if: 1. Rent Control serves the valid State purpose, such as promoting affordable housing; or 2. The City's actions are not arbitrary, which by definition they are not, if they are fulfilling a valid State purpose; and 3. As long as the property owner is not denied all profitable use of his property. Mr. Holleran reported that none of these conditions apply in the present situation. MHC's contention is that the City of San Rafael is taking their property, simply because they are prevented from making as much profit as they would make should there be no controls whatsoever. Unfortunately for them, that is not the legal definition of a taking under either state or federal law. Finally, Mr. Holleran stated he outlined for the City in a letter of September 6t", entitled "What the Richardson Case Really Said" , that while MHC in its lawsuit, relies heavily on the 91" Circuit Court's decision in the Richardson case, in fact, the Richardson decision and various factors on which it is based, are in direct contradiction to rulings given by the Federal Supreme Court, California Supreme Court and numerous California State Courts. He indicated that for instance, the Richardson case relied on a so-called Agnes Nollan test in arguing for regulatory taking of SRCC Minutes (Regular) 09/17/2001 Page 14 SRCC Minutes (Regular) 09/17/2001 Page 15 property; however, that test has been rejected by all of the aforementioned Courts, as applicable to rent control, whether in general or as pertaining to mobile homes. He stated that the Richardson case is also often referred to as support for MHC's contention that below market rents have allowed homeowner equity to balloon. Mr. Holleran stated there is a formula often referred to which predicts how much a below market rent would affect the equity value of a property, which is that a $100 below market rent would cause a $10,000 increase in home value. Conversely, and more importantly from the perspective of the mobile home owner, every $100 increase in rent causes a corresponding $10,000 decrease in homeowner equity. He was unsure whether this came from the Richardson case; however, Richardson did not solve the question of determining what market rate rent in a mobile home park is. MHC would like to be the sole arbitrator of this and offers highly inequitable formulas, such as the Kelly Blue Book value, to advance their case; however, as it is said, "The fox should not guard the hen house". For this reason, he stated, municipalities have determined rent control and vacancy control to be necessary. Mr. Holleran stated that MHC's threat of a Fifth Amendment argument will not stand, as courts have ruled that rent control is a valid exercise of state power and does not in itself constitute an arbitrary taking of property. Even unfavorable federal courts, such as Richardson, in fact, have given a somewhat strange and paradoxical reason for concluding that a taking has taken place. To his understanding, Mr. Holleran stated that their problem with rent control was they believed there was no existing mechanism in place to prevent the seller from charging so high a price for his home that the next buyer would be unable to enjoy the benefits of rent control. The courts were not concerned with whether a park owner was in a position to realize as much as he believed he should or could, rather whether rent control would continue to serve its purpose. Even these adverse courts, such as Richardson and Cotati, have basically implied that should a homeowner make too much when he sold, there might be a taking of park owner property; however, if the homeowner only made a reasonable profit, there would be no taking. This, in spite of the fact that in either case, the park owner's return would be the same. The concept of a taking only applied if the homeowner made too much, not if the park owner did not make enough; therefore, these federal courts are basically in agreement with State Courts and the State and Federal Supreme Courts, who have upheld the argument that no taking occurs if a valid State purpose is fulfilled. Mr. Holleran stated that one could attempt to jigger with the mechanism to cap homeowner profits in an attempt to placate the Federal Court's desire for the valid State purpose behind rent control to be fulfilled; however, there would be a problem with this in that while it could satisfy a Federal Court in a case such as Richardson or Cotati, it would not satisfy a park owner, who would be deprived of his desired windfall profits, even while the homeowner agreed to settle for a more modest, yet perhaps still equitable return. The park owner would derive scant satisfaction from merely seeing a homeowner reap a smaller profit; what matters to him is the rattle of coins in his own pocket. Mr. Holleran indicated that the situation being dealt with is basically one of war, a nationwide declaration of war by the park owners on the homeowners and cities, and not an honest concern by park owners with solving matters of equity or law. They care nothing about the homeowners and, therefore, must be restrained. He stated that our founding fathers in their wisdom, recognizing that power corrupts, sought to bind down government with the chains of the constitution, just so have municipalities sought to bind down mobilehome park owners with the chains of rent control and vacancy control, lest they usurp the last part of a homeowner's equity, his meager stake in what is becoming the fast fading American dream. Mr. Holleran stated that fears about rent control not fulfilling its valid State purpose are unfounded and its protections are still necessary. The vast majority of homes in Contempo are not selling for exorbitant prices, nor are the homeowners reaping robust returns or windfall profits, rather the park owner, MHC, is definitely making a fair and, in fact, spectacular return by any historical comparison, and perhaps, even more than he imagined when purchasing Contempo in 1994, at a substantially discounted price because of rent control. Mr. Holleran questioned why he should now capture all of the homeowner equity at Contempo by being allowed to successfully dismantle the very rent control which formed the basis for the value of his original investment. Mr. Holleran indicated that those at Contempo were not asking to become instant millionaires, rather they merely request to be able to pay off their mortgages and sell their homes under similar conditions which form the basis of their original investments. He requested that the rules not be changed in the middle of the game and concluded, hoping that the arguments in all of the letters, correspondences and meetings, together with their thoughts, feelings, suggestions, desperate cries and heartfelt pleas have given the City both ample reason and shown that there are more than enough weapons in its arsenal, in both equity and law, to defeat the corporate interloper, MHC. He urged the City Council to defend the Rent Control Ordinance, protect citizens, promote affordable housing and restore predictable order to the lives of homeowners at Contempo Marin. SRCC Minutes (Regular) 09/17/2001 Page 15 SRCC Minutes (Regular) 09/17/2001 Page 16 As almost two hours had elapsed, Mayor Boro inquired if other members of the audience wished to address the Council, and if so, he requested that they keep their comments to approximately three minutes and if possible, not be repetitive. Art Lamstein, 294 Yosemite, stated that the City Council should fight back and declare eminent domain as there were many reasons now more than ever for doing so, including maintaining affordable housing and supporting public policy. There would be financial losses in a lawsuit; therefore, the question was how much should be offered to MHC in declaring eminent domain. He stated that based on its use as a mobile home park and affordable housing, he believed they could be offered a small fair profit. Mr. Lamstein stated, however, he anticipated their response, and subsequent to a park purchase committee meeting where eminent domain was discussed, he learned that a value of $71 -million was placed on the property. Should MHC believe the property is valued at $71 -million, he wondered what their complaint was, and he urged Council, with the support of all present, to fight this case. Geoffrey Kaye, 26 Yosemite Road, psychologist, stated both he and wife are mental health workers. They were about to move out of the area for his wife to accept a position in Fairfield, when a real estate agent in the Canal District suggested Contempo Marin, and this permitted them to remain in Marin County. He had been employed at Ross Hospital, a Mental Health Facility, which a large out of state corporation purchased and sold without regard to the community or the needs of the people. This, he stated, is exactly what MHC is attempting to do. Giving a brief history, Mr, Kaye stated they purchased their home last year for $140,000, resulting in an $1,100 mortgage, plus $667 rent, for a total of $1,800 per month. He defied anyone to locate a three-bedroom apartment in San Rafael or Marin County of any quality for $1,800 presently. To sell their home, with a conservative 10% loss and MHC increasing the rent to $1,600 per month, the total cost to the purchaser would be $2,600 per month. This, he indicated, is a very conservative estimate of what is proposed by settling with MHC. Mr. Kaye stated that a reasonable return on the property is a guarantee of California state law as stated in the Health and Welfare Code and reference can be found on the home page of the Contempo Marin Homeowners Association Website at www.cmhoa.or . In conclusion, Mr. Kaye stated that the famous Irish poet, Yates, wrote that in this time (at that time, the 201h century)" the best lack all conviction while the worst are full of passionate intensity." He indicated that the City Council had the opportunity here to do the right thing, as voiced by previous eloquent speakers, and fight back against corporate greed and the agenda of right wing libertarian groups to use regulatory takings laws to dismantle government's right to protect its citizens. Judy Olive, 397 Bryce Canyon Road, graduate student UCSF School of Nursing, stated that during this time of crisis and concern regarding safety and security, she senses a similar happening within the community. Regarding the fiscal impact and the responsibility for the fees for the City of San Rafael, which could approximate to $500,000, Ms. Olive stated this did not equate to even a couple of months' worth of the profits received by MHC and she hoped that each Councilmember and the City Attorneys could be enlightened with long term vision and develop a means to protect the residents of Contempo Marin, even to the point of purchasing the park. Ms. Olive reported she had been a nurse for twenty-three years and having had a severe back injury, was on medical disability for some time. She indicated that during one of the months when she was not receiving her disability check, she informed the office her check would be delayed, thereby causing her rent to be late. The then manager appeared to understand; however, on being late with her payment, she received a three-day eviction notice. Because of this it was necessary for her to go to St. Vincent de Paul to have her rent paid on an emergency basis. She reported that for the past four years she had been requesting to have the laundry facility light, which shines into her house all night, repaired. She indicated she was grateful for the fact that the managers were now approachable; her windows had been spray painted, affording her privacy; however, this took two years, the light remains broken and she feels uncomfortable to ask again. Ms. Olive believed the profits to be exorbitant for MHC; likewise the legal fees to the City; however, this is an investment in the future of the City of San Rafael. Ron Kenyon, Royal Oaks Retirement Park, Petaluma, stated the decision the City Council was about to make would directly and indirectly affect approximately 27 -million people in the State of California, due to the fact that should a precedent be set, MHC will endeavor to do the same to every city with rent and vacancy controls. The action tonight in this case, can set a precedent, not SRCC Minutes (Regular) 09/17/2001 Page 16 SRCC Minutes (Regular) 09/17/2001 Page 17 only for the State of California, rather for the entire United States, which in turn could affect some 300 -million, as each retired person residing in retirement parks and mobile homes have children and grandchildren; therefore, each person, directly and indirectly, can affect as many as eight other people. Having worked hard all their lives, Mr. Kenyon stated these people wanted to be able to afford to live in dignity. Artus Jackson, 276 Carlsbad Court, reported she was present at the time Council was working on the Rent Control Ordinance and recalled the incredible joy when it was passed, in believing the City cared about them and affordable housing. She indicated she put her home on the market in April for $82,500; she received and accepted an immediate cash offer and having gone into escrow, unfortunately, the purchaser was required to withdraw for health reasons. Since then, she has endeavored to sell her home as she cannot afford the present space rent of $618, being disabled and with a total income of $676 per month. She has reduced the price to $60,000, with continued diminishing of equity, resulting in the loss of the money invested in preparing her home for sale. Kirk Tierney, resident of Boyd Hill, stated he was somewhat neutral in that he did not have property, although he has lived in San Rafael since he was nineteen years old. He stated MHC was just for profit; however, he lived in a community where the only investment was each other. To him, a community was a place to live and rear children; he did not deal in profit, rather labor. He wished to see consideration rather than division. Malcolm Hall, R.V. Park of San Rafael, stated he was present as a representative of (the tenants of) R.V. Park of San Rafael, and more importantly, as a citizen of the City of San Rafael, as he viewed this issue to be greater than just an attack on the ordinance. Mr. Hall stated he could not understand how the agreement materialized to the extent where the City was entering into a settlement agreement which would not only do away with vacancy control, but also do away with the ability for residents to defend themselves. Mr. Hall indicated that residents could not afford a lawyer and although not a lawyer, his work was for free. Noting that the country was under attack, Mr. Hall indicated the City had been under attack for some time and he was aware of the fact that for at least three years when the owners of R.V. Park of San Rafael took over, they ignored the ordinance, changing the name of the park. MHC wants to dispense with vacancy control and this assists the owners of R.V. Park of San Rafael, being governed by the same ordinance. This, he stated, is attacking the foundation of the freedom under the Constitution of the State and country, the enemy being greed. Complimenting the present great leaders of the United States, Mr. Hall expressed absolute faith in the City Council. He agreed with Councilmember Cohen's indication at the previous meeting that this issue was not "thumbs down" and had utter confidence they would vote for "thumbs up", and take the issue on, regardless of the potential fees, rather than face the issue of the losses to be incurred by the residents of Contempo Marin. He stated the City Council should affirm they will not allow anyone to attack the City and the constitutional right to have laws made by those elected for the whole City. Finally, Mr. Hall requested that with the present construction in the City and the possibility of some new affordable housing, the City Council should not consider this the type of affordable housing which could take the place of mobile homes. Mobilehome residents have dependents, their own yards, animals, community and to own a home is distinct from an apartment or condominium, no matter how small. He believed in the City Council 100% in this respect. A member of the audience addressed the City Council to invoke the memory of Anise Turina, mother of a good friend, who was a tireless advocate for affordable housing in San Rafael. John Auer, Pastor, First United Methodist Church, San Rafael, stated that although not a resident, he was Pastor to residents of Contempo Marin, amongst whom are nurses, home care health givers, social workers, and a resident who has been fighting for her own life recovering from an aneurysm and is now attempting to recover sufficient health to return to work. He stated that as a testimony to the quality of community evident in Contempo Marin, and the quality of civic involvement represented by those residents in the larger communities of San Rafael and Marin, this would not be a loss solely to the residents, but to everyone. There being no further comment from the audience, Mayor Boro closed the public hearing Councilmember Cohen stated the City Council was present this evening to consider amendments to the mobile home rent control ordinance and not some other issues raised, interesting as they may be. He reported that he had wrestled a lot with this issue in light of what are truly complex legal and public policy issues; he had listened carefully to the testimony given this evening, had read the numerous letters and considered the testimony provided at recent Council Meetings, in SRCC Minutes (Regular) 09/17/2001 Page 17 SRCC Minutes (Regular) 09/17/2001 Page 18 telephone calls and in several meetings held, some in conjunction with Mayor Boro, with residents of Contempo Marin. Councilmember Cohen stated he wish to thank those friends and neighbors for leading him through that complexity to what at the end of the day, is a pretty simple conclusion, which is, that some things are worth fighting for. Things like affordable housing, community diversity requiring a mix of housing types and incomes, and the current Rent Stabilization Ordinance which provides a unique opportunity for working people to have an ownership interest in their home. Councilmember Cohen indicated that the same public policy which led him to vote to adopt the vacancy control and to defend it against previous legal challenge, and the testimony given by residents, led him to decline to amend the ordinance, instead he would direct staff and the City Attorney to fight for the ordinance and the values it represents. Vice -Mayor Miller stated that having reflected deeply on the comments brought forward in this public process and in various other venues, he wished to leave the present ordinance in place, as it would further affordable and workforce housing in the City of San Rafael. Councilmember Heller stated she still had some questions on legal points and understood the legal arguments and the recommendation which led to the initial approval of the settlement agreement. She reported that in the last few weeks and months she had in-person conversations, received telephone calls, and many letters, all of which had been perused by the City Council also, along with some threats, albeit not too many. Councilmember Heller stated the results of tonight's decision may end up not being liked; however, it would be made in unison. She did not believe at this point, with feelings so high and the hard work expended by homeowners, staff and Council, that it would be in the best interest of the City to go forward. Councilmember Heller favored option 3, requesting staff return with further options, and being a great staff, she was confident of their assistance in finding a way. Councilmember Phillips stated that by now the audience had a pretty good idea of the direction of Council; therefore, the thunder was taken from his statement. He thanked staff, as this was a very difficult issue over a long period of time, and felt they did an outstanding job of providing the information from which to draw the conclusion which apparently pleased everyone. Councilmember Phillips indicated he also wished to thank the residents for their assistance in the process, which helped him, personally, to reflect upon new issues not previously considered. He thanked everyone for the effort in putting their thoughts forward for consideration this evening, and on previous occasions. Councilmember Phillips stated he would not argue the pros and cons of the legal issues, noting that while other Councilmembers had their thoughts nicely typed, he arrived with a blank piece of paper and made notes, and he requested forbearance. He noted the legal complexities and believed he had taken these into consideration, along with the input of residents and his own thinking on the issue. He believed Tom Davis, and others, were correct in their assertions that the ultimate decision on how to proceed is at the discretion of City Council, and obviously the Courts would decide the outcome. Councilmember Phillips stated he had reviewed the materials provided by staff, he had listened to residents, had discussed the issue with various members of Contempo Marin and had a private session with City Attorney Ragghianti, whom he greatly respected, and as a result, drew four conclusions based on that process: 1. Through public input, he had gained additional insight as to the consequences of the proposed settlement; 2. The proposed settlement does not promote the City's public policy to support affordable housing; 3. Additional time is necessary to pursue additional ideas put forward by staff and residents this evening, to further promote public policy, as was well stated on a number of occasions, in support of affordable housing; 4. He was struck by everyone's comments, including those of Ann Rahe, who discussed the equity which had been built up and what it means, not merely in terms of dollars and cents, but is life support in many ways. There was a lot of empathy for those in this situation. Based on these four points, Councilmember Phillips stated he would stand to defeat the MHC position and called upon the City Attorney to prepare a written resolution memorializing the City SRCC Minutes (Regular) 09/17/2001 Page 18 SRCC Minutes (Regular) 09/17/2001 Page 19 Council's decision in this regard, and to return it for adoption on October 1, 2001 Mayor Boro thanked City staff and especially, the City Attorney and his outside counsel, who had provided legal advice, as they saw it, in the best interest of their clients, the City Council, and this is what they presented. They were also realistic enough to understand there were other issues to be considered, whether social, economic, political or whatever the case might be, and it is Council's role as policymakers, to address these issues. Mayor Boro, similar to the other Councilmembers, reported having received many telephone calls and letters and had lots of discussion on this topic. He and Councilmember Cohen had met on a couple of occasions with representatives of the mobilehome park. Mayor Boro stated it was his belief the City Council was elected to represent constituents and one way of doing this was by listening, and having listened, they should be responsive and act responsibly for the community. He reported that on July 2, 2001, after extensive deliberation by the City Council, the City signed the agreement; however, the agreement itself in paragraph 2.1 provides that it be subject to approval by the City Council following notice and public hearing. This, stated Mayor Boro, is what tonight's process concerns and the purpose of the public hearing would be to amend the ordinance, subsequent to the hearing. Based on testimony, letters and a personal commitment towards affordable housing, a commitment also held by the City and City Council, Mayor Boro concurred with the other Councilmembers in not going forward. Mayor Boro called for a motion to direct the City Attorney to memorialize tonight's findings, to be returned on the Consent Calendar for approval, at the City Council meeting of October 1, 2001. City Attorney Ragghianti requested that members of the audience addressing the City Council this evening from written prepared remarks submit these to the City Clerk, if not already submitted, for inclusion in the record. He believed this to be important and expressed appreciation for the cooperation, adding copies would be provided upon request. On his own behalf as a Board Member of Contempo Marin, and that of the residents of Contempo Marin, Bill Luft congratulated the City Council for their decision this evening. Councilmember Cohen, noting life's little victories should be taken where they are found, emphasized that it was important to recognize this was an undertaking to return to litigation with MHC. Councilmember Cohen moved and Councilmember Heller seconded, to direct the City Attorney to prepare a Resolution for adoption at the City Council Meeting on October 1, 2001, memorializing the decision of the City Council to return to litigation with MHC, including findings. AYES: COUNCILMEMBERS: Cohen, Heller, Miller, Phillips and Mayor Boro NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None COUNCILMEMBER REPORTS: 9. None. Firefighter Gary Mennick — File 9-3-31 City Manager Gould reported the loss of Firefighter, Gary Mennick, to a heart attack last week, and there being no further business, Mayor Boro adjourned the City Council Meeting at 10:30 PM in Firefighter Mennick's memory. JEANNE M. LEONCINI, City Clerk APPROVED THIS DAY OF 12001 MAYOR OF THE CITY OF SAN RAFAEL SRCC Minutes (Regular) 09/17/2001 Page 19