Petaluma mobile home park owners, residents square off

Representatives for owners and residents of Petaluma’s Youngstown Mobile Home Park began squaring off in a hearing Wednesday that will determine whether to approve ownership’s bid to raise rents by more than 100%.

The attempted rent hikes at Youngstown, as well as at Little Woods Mobile Villa a few miles south, could potentially disrupt life for the many residents at these parks. The move is also seen as a direct challenge to the city’s newly bolstered mobile home protections.

Following months of advocacy by residents pushed to the edge by rising costs, in July the city tightened rent control on the land mobile homeowners lease beneath their residences, and added several other new rules strengthening resident rights.

In response, park owners at Youngstown and Little Woods announced intentions to shutter the longstanding communities and even filed litigation against the city, saying the new regulations interfered with their ability to stay afloat. But the massive rent hikes proposed at each park triggered an automatic arbitration process, where owners make a case for why allowable increases are insufficient, interfering with their right to a fair return, and residents plead their side.

Youngstown’s arbitration will take place all day Wednesday and potentially Thursday. A decision is expected within 14 days. Little Woods’ arbitration was originally scheduled for next week but was postponed until March.

Arbitrations require a heavy lift. The two sides must gather piles of evidence, find legal representation and expert witnesses, and find a way to pay for it all – a particular burden for residents.

“Hundreds of hours” go into the preparation behind these hearings that are not unlike a court case, which review the “complex legal question (that) fair return requires,” said Bruce Stanton, general counsel with the Golden State Manufactured-home Owners League, a group that advocates for mobile home residents in the legislature, the courts and through local community chapters. Stanton is also the lead attorney representing residents in the Youngstown and Little Woods arbitrations.

What is arbitration?

Arbitration is a government hearing held to determine whether rent increases proposed by park owners give them a reasonable rate of return and are justified. In Sonoma County, the process is overseen by the Sonoma County Community Development Commission.

“Hearings are required under a regulation like this for it to be constitutional. A park owner is entitled to due process, and that's what this hearing provides for them,” Stanton said.

The rules and manner in which the meeting is held are governed by California law. Petaluma’s municipal code outlines additional specifics.

The hearing is automatically triggered after park owners and operators propose a rent increase beyond a 70% Consumer Price Index in the Bay Area (the cost of change in goods and services) or 4% of a park resident’s current rate, whichever is less. Currently, the rate is set at 2.03%.

The city’s rules outline a series of time-sensitive actions. Within a month of notifying residents of the rent increases, owners must notify the city and the city clerk must assign an arbitrator and select a hearing date. It must be held up to 60 days after assigning an arbitrator and cannot be held in December.

About 10 days before the hearing, representatives from both sides are required to meet and exchange evidence they plan to use in good faith.

For Youngstown resident Jodi Johnson, it’s been “months and months” of preparation that included compiling interviews, photographs and other information to bolster their argument.

“I literally, for days, interviewed people … one after the next, after the next. And we compiled, we fact checked, because we never put anything in there that isn’t true,” Johnson said.

Residents at Little Woods, whose arbitration hearing was postponed to March, are grateful for more time to prepare, but “we need an answer,” said Ángeles Cruz, adding that “some residents have expressed an urgency to have their lives back.”

Lawyers representing park owners were not immediately available for comment.

The evidence varies from case to case and depends on the submission of documents and testimony by park representatives or residents, “but it’s largely driven by expert witnesses who are submitting reports” and testimony, along with responses or rebuttals, Stanton said.

“Really, it’s a battle of experts,” he said.

Arbitrators – typically lawyers, judges or someone with Superior Court-level experience in arbitration proceedings – are usually skilled in the rent-dispute process. They should have familiarity with analyzing financial records and have no vested interest in mobile home parks, according to the guidelines as outlined in Petaluma’s municipal code.

Though both owners and tenants will bring evidence, “mobile home park owners shall bear the burden to prove” to the arbitrators that they need the rent increases, as stated in the city’s municipal code.

A variety of factors considered include maintenance and operating expenses, “substantial” park rehabilitation, costs from a natural disaster, rent history and “other financial information which the owner is willing to provide” according to the city code.

If the arbitrator decides any amount of the increase is justified, residents shall pay the amount within 30 days. However if the arbitrator decides against increases, the owner shall refund any overpayments within 30 days of the decision, and tenants can legally withhold that amount from the upcoming rent until it’s paid off.

Defining ‘fair return’

Bill Feeney, owner of another Petaluma mobile home park, the Cottages, has been through a number of arbitrations at his Petaluma park and another in unincorporated Sonoma County.

“It's very expensive, it's very unpredictable and very stressful,” he said. That’s why owners, he said, offered not to go this route if the city would at least reconsider the vacancy control portion of the new ordinance, which bars land rental increases upon a change in ownership.

Feeney has lost bids for higher rents in some cases, but in others won increases of hundreds of dollars per month. He said the outcome largely depends on the arbitrator, which is why he considers the process “flawed.”

“What’s a fair return,” Feeney said. “If you ask 10 people, you're going to get 10 different answers.”

In the Youngstown case, the park owners’ experts are claiming a fair return falls somewhere in the ballpark of 11% to 20%, while residents’ experts say it should be closer to the 3% to 5% range. That’s where “the battle lines here are going to be drawn,” Stanton said.

Because of the risks involved with arbitrations, Feeney has taken a different approach, turning to long-term leases which set separate rent increases and lease terms and have traditionally been exempt from rent control laws. Feeney said this protects residents from the volatility of arbitrations and allows him enough return to invest heavily in maintaining and updating his parks.

But long-term leases have drawn scrutiny and criticism for their ability to circumvent mobile home owner protections and their potential for exploitation. The terms of such leases can vary widely, sometimes without residents’ full understanding.

In 2020, California passed AB 2782, which no longer allows new long-term leases signed after Feb. 13, 2020 to be exempt from local rent control laws. After Jan. 1, 2025, even exemptions baked into older long-term leases will be void. Feeney and the Western Manufactured Housing Communities Association, a trade association representing park owners, operators and developers, are challenging the provision in court.

The Youngstown arbitration and its outcome will not apply to the park’s 19 residents on long-term leases, which accounts for 5% of such contracts across the city. As of November, 328 spaces in Petaluma mobile home parks are under long-term lease agreements, with 44% of those at the Cottages, Feeney’s property. Currently there are no long-term leases at Little Woods Mobile Villa, according to data provided by the city of Petaluma.

Looking back, there have been nearly 100 arbitrations across Sonoma County since 1987, with the vast majority occurring before 2001, according to data shared by the Sonoma County Community Development Commission. Sometimes the rent hikes or pass-through of fees under review might be for just a few park spaces, just one home, or a whole community. And the outcomes have varied considerably.

In the last 15 years, the Sonoma County Community Development Commission has held 13 arbitrations – seven in Petaluma, three in Windsor, two outside Santa Rosa in the unincorporated area, and one in Cotati.

As they headed into arbitration, residents at Youngstown said they felt confident in their legal team and good about the financial support from Petaluma People Services Center, which has taken on the task of fundraising.

Though the hearing brings “a lot of emotion,” said Tim Porteous, one Youngstown resident, it’s an opportunity to help other mobile home residents who might be facing similar situations. Residents at Little Woods feel “in limbo” but are similarly seeking to empower themselves and their neighbors in the fight for affordable housing, Cruz said.

“If we can prevail, it shows that you don't just have to give up and wave the white flag and move on, move out or remain unhoused. You don't have to do that,” Johnson said.

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.