Arbitration leads to $118 rent increase for Youngstown mobile home residents in Petaluma

An arbitrator has issued a long-awaited decision on proposed rent increases at Petaluma’s Youngstown Mobile Home Park, raising rates more than residents had hoped, but not nearly as much as the owner had sought.

The arbitrator granted park owners a permanent monthly rent increase of $118 per mobile home space, retroactive to Dec. 1 last year.

The rent hike was unwelcome news to residents, who say they are already squeezed by climbing monthly charges. But it was far below the more than $900-per-month increase the park owners sought going back to January 2023.

"We feel it’s a loss for everyone in the park and everywhere else,“ said Jodi Johnson, a Youngstown resident and advocate. ”It goes against the very protections that have been put in place.”

Arbitration hearings are triggered automatically when proposed rent hikes exceed local rent control regulations, and the recent hearing was seen as a test of Petaluma’s new mobile home protections, which have riled park owners.

Daniel Weisfield, Youngstown’s owner, property manager, and co-founder of the Los Altos-based park operator Three Pillar Communities, declined to comment on the arbitration outcome Monday.

“A lot of people in the world wouldn’t think $118 increase a month is astronomical. For individuals, especially seniors on a fixed income, $118 a month is a burdensome increase,” said Elece Hempel, executive director of Petaluma People Services Center, which played a key role in helping residents raise enough funds to cover the more than $150,000 in legal fees needed for arbitration.

Attorneys for the city and for the residents stated that they needed time to thoroughly review the decision before commenting.

The process

Petaluma mobile home residents typically own the structures they live in, but they must rent the land beneath them. Since at least April 2023, they have advocated for stronger mobile home regulations following similar activism in Santa Rosa, testifying to the pressures of rising rents at City Council meetings.

Mobile home residents, who at Youngstown and other seniors-only parks are often retired and reliant on fixed incomes, said some among them have been forced to turn to food banks or forgo heat in order to keep costs down.

In response, the Petaluma City Council approved an update to the city’s mobile home rent laws last July, the first in nearly 30 years.

The updated regulations limit rent increases to either 4% per year, or 70% of the Consumer Price Index — a measure of the average change in prices over time for goods and services — whichever is lower. As of August 2023, the allowable increase under these rules was just over 2%.

Following the rules changes, park owners at Youngstown announced they’d convert the park to all ages and then threatened to close it, citing concerns that it was not “financially viable” to continue operating.

Park owners then proposed a rent hike of more than 100% via a 300-page packet delivered to residents, followed by another closure notice. Owners at Little Woods Mobile Villa a few miles south took similar steps, triggering their own arbitration process by announcing rent increases of more than 300%. That case is scheduled to be heard in April.

Youngstown’s arbitration took place over four days in January and February with over 30 hours of testimony from expert witnesses, owners and residents and over 2,500 pages of evidence. The arbitrator, Frances Fort, delayed her decisionby three weeks, citing the volume of material to review.

The debate came down to what constitutes a “fair rate of return” for park owners, which they are entitled to, and how figures like expenses and income are measured.

Owners laid out a number of calculations justifying the requested rent hike or alternatively lower increases that would at least “bring the Park closer to approaching a fair and reasonable return,” as lawyers put it in a brief, given escalating operating and maintenance costs and investments put into the property. Witnesses presented by Youngstown testified to an expected annual return of between 12 and 20%.

The residents’ team argued that owners’ methodology was flawed, inappropriately applied and out of keeping with precedent. In a closing brief filed Feb. 16, attorneys accused the owners of attempting to use the arbitration process as “a roadway out of rent regulation.” They pointed to another arbitration triggered by owners in 2022 with an attempted 40% rent increase that was rejected outright.

In the 45-page decision issued late Friday, the arbitrator’s analysis weighed monthly increases ranging between $16 and $158. The $118 bump equates to a 14.5% increase, which is “far beyond the annual CPI increases allowed by the Amended Ordinance, and increases the average rent at Youngstown to $930 per space per month …well above the most comparable, Petaluma Estates,“ the ruling noted. “This rent increases would give Youngstown a fair rate of return while also ‘preventing the imposition of exploitive, excessive and unreasonable mobile home space rent increases,’” as the ordinance’s stated purpose sets out.

On top of the new monthly hike, each affected resident will have to come up with $472 for the retroactive increases going back to December, Johnson pointed out. There’s also a question of whether residents will be required to shoulder some or all of the park owners’ attorney fees.

It’s another blow in a process that “has been excruciating for every single resident,” Johnson said, given the scrambling in the last several months to gather funds, legal representation and evidence to support their case, not to mention the general sense of limbo.

“It’s led to hopelessness, it’s led to stress, it’s led to suicidal thoughts,” she said.

Hempel noted that many residents are struggling based on the number of calls Petaluma People Services Center – which provides a variety of social services to residents in the city and beyond – has received from people seeking mental health support.

Petaluma People Services Center has been encouraging residents to set aside money, but that could mean as little as $10 a month, Hempel said. It might be “choosing to cut a pill in half every now and then. It becomes a burden on them and it becomes a sacrifice. Maybe they’re not going to drive their car to the senior center and get that socialization that they need. It’s a number of things,” she said.

Ongoing lawsuits

While the arbitration process plays out, Petaluma mobile home park owners have also challenged the city in court.

In October, owners of Youngstown and Little Woods filed a lawsuit against the city, claiming that the city’s recently enacted mobile home regulations and the state’s mobile home laws forced owners to operate at a loss, weakened contractual agreements and took away the owners’ property rights.

Youngstown park owners filed a second lawsuit in mid-January against the city claiming that another regulation preserving the seniors-only status of some of its mobile home parks prevents park operators from renting to younger residents and forces them to discriminate against the would-be residents – specifically people of color. While that litigation is pending, mobile homes have been listed and shown as if Youngstown no longer carries its 55-and-up designation, according to residents as well as online listings.

In a December newsletter, Weisfield and Three Pillars Communities framed the arbitration and litigation fight as a righteous one: “I would even argue that we are pioneering a new type of ‘social impact’ investing. Instead of advocating for progressive causes like DEI or climate action, we are investing our time, money, and reputation to advocate for property rights and rule of law – which we see as foundational for a prosperous, inclusive society,” the newsletter read.

Three Pillars operates at least 70 mobile home parks in 14 states.

At Youngstown, some residents are hoping for a pathway to challenge the arbitration result. Hempel of PPSC said the organization is committed to supporting residents throughout the process.

Though she said businesses deserve a fair income, “at the end, this impacts our affordable housing stock in a way we might never recover. These seniors might never recover.”

You can reach Staff Writer Jennifer Sawhney at 707-521-5346 or jennifer.sawhney@pressdemocrat.com. On X (Twitter) @sawhney_media.

You can reach “In Your Corner” Columnist Marisa Endicott at 707-521-5470 or marisa.endicott@pressdemocrat.com. On X (Twitter) @InYourCornerTPD and Facebook @InYourCornerTPD.