Facts: The owner of a mobilehome park subject to rent control applied to the city to increase the monthly rent charged to tenants. The city permitted the owner to increase rent solely to the extent to maintain the owner’s net operating income. The city did not consider the owner’s debt obligations for their purchase and finance of the park.
Claim: The owner sought money damages from the city, claiming the rent increase was not sufficient to provide a profit since the city did not take into consideration the owner’s debt obligations.
Counterclaim: The city claimed it correctly assessed the owner’s net operating income as a basis for increasing the allowable rent since rent control does not need to consider the debt obligation of the owner.
Holding: A California court of appeals held the city correctly assessed the owner’s net operating income as a basis for increasing the allowable rent in the rent-controlled mobilehome park since the city is not required to take into consideration an owner’s debt obligations. [Colony Cove Properties, LLC v. City of Carson (2013) ___ CA4th___]
Editor’s note — If the city were to factor a mobilehome park owner’s debt obligations into the rent increase computation, inequities would result. In effect, an owner who obtained financing for their purchase of a rent-controlled mobilehome could then obtain higher rents than a party that paid cash.