El Dorado Palm Springs, Ltd. v. Rent Review Commission

230 Cal. App. 3d 335, 281 Cal. Rptr. 327, 91 Daily Journal DAR 5938, 91 Cal. Daily Op. Serv. 3818, 1991 Cal. App. LEXIS 520
CourtCalifornia Court of Appeal
DecidedMay 20, 1991
DocketE007483
StatusPublished
Cited by10 cases

This text of 230 Cal. App. 3d 335 (El Dorado Palm Springs, Ltd. v. Rent Review Commission) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
El Dorado Palm Springs, Ltd. v. Rent Review Commission, 230 Cal. App. 3d 335, 281 Cal. Rptr. 327, 91 Daily Journal DAR 5938, 91 Cal. Daily Op. Serv. 3818, 1991 Cal. App. LEXIS 520 (Cal. Ct. App. 1991).

Opinion

Opinion

TIMLIN, J.

This case involves a dispute between the owner/operator of a Palm Springs mobilehome park (the petitioner below and the respondent herein—referred to hereinafter as El Dorado) and the residents of that mobilehome park (the real parties in interest below and the appellants herein—referred to hereinafter as the residents). The gist of the dispute concerns the application of the Palm Springs municipal rent-control laws by the Palm Springs Rent Review Commission (the respondent below—referred to hereinafter as the Commission) to the space rents to be charged in that mobilehome park.

The residents appeal from an order of the trial court, which order granted El Dorado’s petition for a writ of mandate to compel the Commission to approve El Dorado’s application for a hardship rent increase. By their appeal, the residents have called upon us to rework the fertile fields of contention which we first plowed in Palacio de Anza v. Palm Springs Rent Review Com. (1989) 209 Cal.App.3d 116 [257 Cal.Rptr. 121] (hereinafter Palacio). We conclude that the trial court’s order is correct in all respects, and we consequently affirm the same.

Facts 2

On April 8, 1980, the citizens of the City of Palm Springs adopted an initiative rent-control ordinance. In general terms, this initiative ordinance: *338 (1) prohibited rent increases from being imposed more frequently than once a year; (2) limited rent increases to rates of no more than three-fourths of the percentage increase in the consumer price index over any one-year period of time in question; (3) did not contain a “hardship rent increase” provision for landlords, other than a provision which declared the ordinance to be nonapplicable to those rental properties as to which the ordinance would operate in a “confiscatory” manner; and (4) required that a determination as to whether such a confiscatory impact had occurred in any one particular case be made by the courts. The initiative ordinance also permitted the City Council of Palm Springs to “supplement” the initiative ordinance “so long as Palm Springs in no way diminishes any protection which this ordinance affords to tenants.” (Initiative Ord., § 10.)

On October 1, 1980, the Palm Springs City Council adopted Ordinance No. 1117. This ordinance apparently was adopted to forestall a constitutional challenge to the initiative rent-control ordinance. 3 Ordinance No. 1117 supplemented the initiative ordinance by creating a rent review commission and providing for hardship increases in rents over and above those allowed by the initiative ordinance in certain limited circumstances.

On November 18, 1983, the Commission conveyed a written recommendation to the city council that the city council adopt certain “Guidelines For Hardship Rent Increases” (hereinafter referred to as the Guidelines). The Guidelines set forth a very specific format and procedure for evaluating landlord applications for hardship rent increases. Among the provisions contained in the recommended Guidelines was a provision (section 101(c)(l)(xii)) which permitted the inclusion of certain purchase money financing interest payments (debt service costs) in the costs which were allowable for the purpose of calculating a landlord’s “net operating income.” 4 In accordance with the Commission’s recommendation, the city council adopted the Guidelines by resolution on December 7, 1983.

*339 On January 18, 1984, the city council adopted Ordinance No. 1213. This ordinance was intended to simply restate and codify (as part of the municipal code) the provisions of the prior rent-control ordinances, beginning with the initiative ordinance, and not to supersede or repeal any of those preexisting provisions.

In the spring of 1986, El Dorado was in the process of finalizing its negotiations for the purchase of the mobilehome park here in question. Section 101(c)(l)(xii) of the Guidelines, the provision that allowed purchase money debt service costs to be included as an allowable operating expense in calculating a landlord’s net operating income, was of particular concern to El Dorado. El Dorado insisted on a clause in the purchase agreement that would permit it (El Dorado) to withdraw from the purchase of the mobilehome park if the Guidelines (and, in particular, § 101 (c)( 1 )(xii)) changed materially prior to the close of the purchase escrow. 5 No such changes in the Guidelines occurred prior to the close of the purchase escrow, and, on April 1, 1986, El Dorado purchased the mobilehome park for the sum of $7.5 million—some $7,360,000 of which was financed by promissory notes secured by deeds of trust. On that same day, April 1, 1986, El Dorado filed an application with the Commission for a hardship rent increase. On a “per space” basis, El Dorado’s application sought the Commission’s approval of a $179.46 monthly rental increase. El Dorado justified its request for a rent increase, to a significant extent, by reference to its purchase money debt service cost. The residents opposed the application before the Commission.

On April 16, 1986, the Commission opened its hearing on El Dorado’s application for a hardship rent increase. This hearing was conducted periodically over the next two years and three months.

*340 On November 7, 1986, while El Dorado’s application for a hardship rent increase was still pending, the Commission recommended to the Palm Springs City Council that it (the city council) repeal section 101(c)(l)(xii) of the Guidelines. On December 15, 1986, the city council acted on this recommendation and adopted Resolution No. 16072, repealing and deleting section 101(c)(l)(xii) from the Guidelines.

On July 18, 1988, the Commission completed its hearing on El Dorado’s 1986 application for a hardship rent increase and indicated its intended decision on the matter. On October 17, 1988, the Commission issued its final written findings and decision with respect to that application. Of particular interest here, the Commission declined to allow El Dorado’s purchase money debt service cost as an operating expense in calculating El Dorado’s net operating income, concluding that the city council’s repeal of section 101(c)(l)(xii) of the Guidelines had had the effect of eliminating those costs as an allowable operating expense insofar as El Dorado’s application for a rent increase was concerned. 6 The net result of the Commission’s decision was an approval of a $65.17 “per space” monthly rental increase for El Dorado—some $114.29 per space/per month less than the increase for which El Dorado had applied.

In the meantime, on July 26, 1988 (shortly after the Commission had completed its hearing on El Dorado’s rent increase application but before the Commission’s final written decision on that application was released), El Dorado notified its residents that the monthly space rentals within the mobilehome park would be increased, effective September 1, 1988, by $65.17 per space.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Ciraulo v. City of Newport Beach
54 Cal. Rptr. 3d 515 (California Court of Appeal, 2007)
Garcia v. Los Banos Unified School District
418 F. Supp. 2d 1194 (E.D. California, 2006)
Liang v. San Francisco Residential Rent Stabilization & Arbitration Board
21 Cal. Rptr. 3d 715 (California Court of Appeal, 2004)
El Dorado Palm Springs, Ltd. v. City of Palm Springs
118 Cal. Rptr. 2d 15 (California Court of Appeal, 2002)
Donnellan v. City of Novato
103 Cal. Rptr. 2d 882 (California Court of Appeal, 2001)
Herman v. LA COUNTY METRO. TRANSP. AUTH.
84 Cal. Rptr. 2d 144 (California Court of Appeal, 1999)
Herman v. Los Angeles County Metropolitan Transportation Authority
71 Cal. App. 4th 819 (California Court of Appeal, 1999)
Lowe v. City of Commerce
59 Cal. App. 4th 1075 (California Court of Appeal, 1997)
Rezai v. City of Tustin
26 Cal. App. 4th 443 (California Court of Appeal, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
230 Cal. App. 3d 335, 281 Cal. Rptr. 327, 91 Daily Journal DAR 5938, 91 Cal. Daily Op. Serv. 3818, 1991 Cal. App. LEXIS 520, Counsel Stack Legal Research, https://law.counselstack.com/opinion/el-dorado-palm-springs-ltd-v-rent-review-commission-calctapp-1991.