Mobile home park owners sue Petaluma over rent cap rules

The owners of two Petaluma mobile home parks at the center of an ongoing fight over rent control have filed a civil lawsuit against the city claiming its recently tightened regulations are unconstitutional.

In the lawsuit, the owners of Youngstown and Little Woods Mobile Villa claim Petaluma’s mobile home rent control laws, most recently updated last August, violate the park owners’ constitutional rights by compelling them to operate at a loss.

The suit also claims that Petaluma’s rules weaken contractual agreements between residents and park operators by requiring payments to displaced residents if the parks close, and that they take away the owners’ property rights by barring them from closing.

The suit, filed Oct. 10 in Northern California District Court, lists Youngstown MHP LLC and Little Woods Mobile Villa LLC as plaintiffs.

Youngstown Mobile Home Park on N. McDowell Boulevard is a seniors-only park with 102 spaces. Little Woods Mobile Villa on Lakeville Highway is an all-ages park with 78 spaces, a majority of which are rented to Spanish-speakers.

The lawsuit comes as mobile home residents have ramped up their fight for stronger protections over the past year, and with Petaluma City Council members ratifying stricter rent caps along with other rules, such as a new “overlay district“ prohibiting owners from changing seniors-only parks to all-ages parks.

At the same time – and according to residents, not coincidentally – Little Woods residents were hit with more than $1,500 in proposed rent increases, Youngstown residents were hit with more than $900 in proposed rent increases as well as their park being converted to all-ages, and owners of both parks have threatened permanent closure if they can’t raise rents to the level they want.

City Attorney Eric Danly said he couldn’t comment extensively on the suit, but did say the city was seeking outside counsel, and added, “I believe we’ll be able to effectively defend the litigation.”

“Suffice it to say, the City Council is very much committed to providing these regulatory protections to mobile home residents, and we as city staff are committed to implementing them effectively,” Danly said.

But Paul Beard II, the lawyer representing the mobile home park owners, described the city’s actions as “a government land grab.”

The city, he contends, violated the U.S. Constitution by preventing privately owned mobile home parks from earning a “reasonable profit” while simultaneously preventing them from shutting down.

“The city is trying to force my clients to continue providing affordable housing as a social good, even though the city has made it impossible for my clients to bring in enough revenue to cover their expenses," Beard said in an email to the Argus-Courier.

'Unviable businesses’

At the center of the lawsuit is Petaluma’s Mobile Home Rent Program, which the suit claims “deprives park owners of their constitutional right to a fair return on their investment.”

Under the city’s recently enacted amendments, rent increases that were previously capped at 6% of the base rent annually are now capped at 4% or 70% of the Consumer Price Index – a measure of the average change over time in the cost of consumer goods and services – whichever is lower. Based on today’s CPI rates, rents in Petaluma are currently capped at a 2% yearly increase.

Those restrictions resemble mobile home rent stabilization laws in a few other nearby jurisdictions, including Santa Rosa and Windsor. Last week, the Sonoma County Board of Supervisors enacted its own mobile home rent control laws for unincorporated areas.

While the caps are intended to give park owners a guaranteed rent that “accurately reflects the rate of inflation,” according to the municipal code, mobile home park owners contend that the city’s current ordinances are prohibitive and don’t keep up with the cost of inflation.

"Our goal was always to provide affordable housing in Petaluma, but we can't keep our park open because the city won't let us bring in enough rent to cover our expenses,“ said Daniel Weisfield, Youngstown’s property manager and co-founder of Three Pillar Communities, the Los Altos-based park operator. ”The city's rent control ordinance has brought us to the point where we need to shut the park down.“

On its website, Three Pillar Communities describes itself as a company of “mission-driven, for-profit affordable housing investors” that operates more than 70 mobile home communities in 13 states.

A search of California business records showed that Weisfield was briefly the main agent of Youngstown MHP LLC before its main agent became Los Angeles-based Corporate Creations Network, Inc. in December 2022.

Little Woods Mobile Villa is managed by Stockton-based Harmony Communities. That company owns and manages 33 properties in California and Oregon, according to its website.

The park is owned by Little Woods Mobile Villa LLC, while the company is owned by the Ubaldi family, with day-to-day management overseen by Nick Ubaldi.

With rents at Little Woods “far below market rent” over the past 25 years, the Ubaldis have been forced by the city “to subsidize housing for its residents without any contribution on their part,” Ubaldi said in an email to the Argus-Courier.

“It’s no longer economically viable. The city is trying to compel us to stay in a business we no longer wish to be part of. If genuinely concerned, the city should contribute its fair share rather than burdening us. This land is ours, not the city’s,” he said, adding that they should be allowed to close if they need to.

City regulations have trampled fundamental property rights, “forcing property owners like my family into sustaining unviable businesses against their will,” Ubaldi said. “The city of Petaluma's overreach has cornered business owners. They seem indifferent to the destruction of affordable housing due to overregulation.”

State law questioned

Though the lawsuit is directed at the city, it also calls into question a state law on mobile home park closures. One requirement of that law is that, should park owners decide to close, they must pay displaced residents the market value of their mobile home if they are unable to find adequate housing in another park.

The plaintiffs say those requirements for closure, which the city has enforced since 2006, are “extraordinarily burdensome.”

Under Petaluma’s municipal code, a park owner wishing to convert or close a mobile home park must file a “mobile home relocation impact report” that requires, among other things, information submitted by residents. But according to the lawsuit, park owners have been unable to obtain that information “because of the lack of meaningful cooperation on (residents’) part,” which has effectively “thwarted” their ability to complete the report.

“That is information that we do not have elsewhere in a reliable format,” Weisfield said.

At Youngstown, arbitration between residents and owners is set to begin in January over the owners’ proposed $900 monthly rent increase. Last year, residents from the senior community went into arbitration over a proposed 40% rent increase, and won.

Meanwhile, residents at Little Woods are also scheduled to begin arbitration hearings in January over their proposed monthly rent hike of more than $1,530 – an increase ranging between 128% and 352% for some residents, according to Margaret DeMatteo of Legal Aid.

A case management hearing for the lawsuit is scheduled for early January in San Francisco, according to court documents.

Marisa Endicott contributed to this report.

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