For more than 20 years, Santa Barbara County’s mobile home park
rent-control ordinance quietly protected residents of one of the last
affordable housing options in the area. But since the City of Goleta
was incorporated in 2002, the owners of Rancho Mobile Home
Park — Daniel and Susan Guggenheim — have made it clear that they have
other ideas about what is fair. The two-year statute of limitations
protecting the ordinance disappeared when Goleta adopted the county’s
ordinance for its own use, and the Guggenheims took advantage of the
opportunity to challenge a regulation they said was taking too big a
bite out of their potential annual gross income. Embroiled in legal
action for the past seven years, the couple tried a number of measures
to get around rent control, including an unsuccessful attempt to
convert mobile home pads on their property into sellable condominium
lots.
A recent decision by a federal court could leave the City of Goleta
owing millions to the beleaguered park owners, but not before the city
fights back. “This is a long way from being resolved, but the important
thing to take away from it is that Goleta’s rent-control ordinance is
constitutional,” said City Attorney Tim Giles, positing that any judge
asked to assess an amount owed to the Guggenheims by the city would
take into account the fact the park had been rent-controlled for nearly
20 years when they purchased it. Judge Andrew Kleinfeld — the lone
dissenter on the three judge panel that made the ruling — noted that
the Guggenheims bought the park at a much lower price than they would
have if it had not been rent-controlled, which he maintained stripped
them of a right to compensation.
The city announced on Tuesday that it will file a petition to have
the fate of its mobile home park rent-control ordinance — some facets
of which were found by the Ninth Circuit U.S. Court of Appeals panel to
be unconstitutional — sent back to the Circuit Court to be decided by
its full complement of 11 judges. The 2-1 decision, handed down early
last week, left the task of figuring out the implications of the
decision to the Federal District Court that had ruled that, according
to the Fifth Amendment of the U.S. Constitution, the ordinance
comprises a regulatory taking of property. As it stands, the Circuit
Court’s current ruling means that although the ordinance itself is
constitutional, the Guggenheims — who have owned Rancho since
1997 — are entitled to compensation for land value lost due to the
ordinance’s stipulation that rent increases be limited to 5 percent
annually. “This applies to all parks in Goleta, and we’ve been getting
calls from parks throughout the county,” said Richard Close, an
attorney representing the Guggenheims. “The Ninth Circuit covers all of
California, so the impacts will be far reaching.” For their part, the
three panel judges, Alfred Goodwin, Kleinfeld, and Jay
Bybee — appointed by Presidents Richard Nixon, George H.W. Bush, and
George W. Bush respectively — are reputed to be relatively conservative
judges on the famously liberal Ninth Circuit.
How much money the Guggenheims could be entitled to is as yet
unclear, although Close indicated that it could amount to tens of
millions. “I assume the city would be setting aside the funds now to
pay for this. That would be the prudent thing to do,” he said. While
the city has a liability reserve, Giles said that a finding in the
millions would seriously hamper the city’s ability to provide core
functions to its citizens. “We consider this to be a very serious
challenge to rent stabilization,” said Bruce Stanton, an attorney for
the Golden State Manufactured-Home Owners League, adding that his
client intends to stand behind Goleta as it appeals the panel’s
decision. Giles said that if the Ninth Circuit rejects their
petition — which will be submitted on October 9 — the city will file a
petition with the U.S. Supreme Court.
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