Denial of Mobile Home Park’s Application for Rent Increase is Upheld Because Rent Control Ordinance Properly Balanced the Rights of the Park Owner and the Tenants

Appellant Besaro Mobile Home Park, LLC (“Besaro”) operated a mobile home park in the City of Fremont (“the City”).  In 1987, the City adopted a rent control ordinance to address the unique attributes of mobile home ownership and park management.  In 2009, Besaro filed an application for a major rent increase under the ordinance.  Although Besaro admitted that it was currently receiving a fair rate of return on its investment, it argued that the rents should be consistent with general market conditions.  The application was denied following an administrative hearing and the superior court denied Besaro’s petition for writ of administrative mandate.  In the appeal, Besaro argued that the denial of the major rent increase was contrary to the ordinance and violated its rights under the California Constitution. 

The appellate court disagreed.  The court explained that the ordinance set a very specific structure for regulating the rents at mobile home parks and calculating annual increases.  The ordinance allowed park owners to petition for a major rent increase to ensure the fair rate of return that is constitutionally required, but it did not purport to proscribe only rents that fall above the market rate, as Besaro contended.  The court found that Besaro failed to carry its burden of showing that the hearing officer’s construction of the ordinance was unreasonable or unlawful, or that her decision amounted to an abuse of discretion.

With respect to Besaro’s constitutional claims, the court explained that a municipality may use its police powers to adopt a rent control ordinance when the provisions of that ordinance “are reasonably calculated to eliminate excessive rents and at the same time provide landlords with a just and reasonable return on their property.”  Contrary to appellant's assertions, the ordinance did not have a confiscatory effect because Besaro was earning a fair return on its investment.  Furthermore, the City’s decision to enact the ordinance served a legitimate government purpose of protecting renters in a captive market from excessive rent increases.  Accordingly, the ordinance protected both the park owners and the tenants by balancing the rights of each party.  The court thus concluded that the denial of the major rent increase was proper.

For the full decision, see http://www.courtinfo.ca.gov/opinions/documents/A130753.PDF