June 23, 2006

Residents see $61 increase, rather than $113 sought by owners, as a victory but a city official says, “I have a feeling it’s not over.” A judge has twice thrown out smaller increases ruling the rental board didn’t grant park owners a fair profit.

By Gene Maddaus

In a victory for tenants at the Carson Gardens Trailer Lodge engaged in a five-year legal battle, the city’s rental board has approved a monthly rent increase of just over half what the park owner was seeking.

Tenants crowded the Wednesday night meeting of the Mobilehome Park Rental Review Board, and hailed the $61 monthly increase. Carson Gardens’ owners, Tom Flesh and Susan Schott, were seeking an increase of $113 per month.

“Obviously nobody likes a rent increase, but it’s probably the best we could have gotten,” said Stuart Parker, an attorney for the tenants. “It’s about as big of a victory as the residents can get.”

A judge has twice thrown out smaller increases, ruling that the rental board was too stingy and had failed to grant the park owners enough of a profit margin.    The board is hoping its third try will be enough to satisfy Judge Dzintra Janavs, while not overly burdening park residents.

Attorneys for the owners did not return phone calls for comment Thursday. In memos to the city, they objected to the $61 figure as being arbitrary. The city arrived at the figure by averaging the owners’ request — $113 — with two other figures based on the consumer price index and a survey of comparable rents at other parks.

It appeared likely that the owners would continue to press for a higher increase in court.

“I’m guessing the other side is not happy with what we did,” said Ken Freschauf, the city’s housing program manager. “I have a feeling it’s not over.”

Carson Gardens is at 437 W. Carson St. The 96-space park was built in the 1950s, and is not one of the nicer parks in the city. The current owners bought it in 1997 for about $1.5 million, and took out a $1.2 million mortgage. Due to the new owners’ debt, gross profits on the park fell from $158,000 in 1996 to $58,000 in 1999. The new owners sought an increase in rent, which averaged about $238 per space, to make up the difference.

The rental board initially granted an increase of up to $23 per month. The owners sued, and the court ruled the board had not properly accounted for the owners’ mortgage interest costs in calculating the increase, and ordered it to try again. The board then came up with a $36 per month increase, which Janavs ruled was still too low.

Frustrated with the rental board, she imposed a $113 increase.  The park owners sought immediately to collect the increase from tenants, and sued those who did not comply.       The state appellate court later invalidated Janavs’ ruling and found that only the rental board could set the appropriate increase.

The lawsuit was dropped, and the tenants counter-sued to collect their excess payments plus penalties. That case is still pending.

The rental board’s decision on Wednesday will be retroactive to 2001, which could leave some residents on the hook for $3,000 or more. The board suggested that the city could either loan or grant the tenants the money to pay back rent. It’s just a mess,” said Gerri Camara, president of the park’s homeowners association. “We have people in this park — some are retired, there are lots of disabled people, some are on SSI. If you’re on SSI, you get $900 a month. You can’t afford that.”