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December 14, 1992 - economic impact report from the Mobile Home Park owners, community input regarding the economic consultant's report, and Council decision whether or not to pursue the matter. REPORTS: Western Mobilehome Association, 12/8/92 Williams, Kuebelbeck & Associates, Inc., undated Letter from Terry R. Dowdall, Swanson and Dowdall, 12/8/92 Assistant Finance Director Ponty presented a summary of the current discussions of mobile home rent stabilization in Redwood City. Paul Deffebach, Western Mobilehome Association Representative, introduced Mr. Todd Clayter, Economist of Williams, Kuebelbeck & Associates, Inc. who assisted in the analysis of return on investment under rent control described in their report with the following conclusions: 1) the implied interest rate is lower than financing currently available; 2) cash on cash return is 5.43%, and typical return is 15% to 20%; 3) alternative investment analysis shows average annual rate of return based on NOI yields 3.2%, and relatively risk-free T-Bill investment yields 7.5%; 4) based on Goldberg study, proposed ordinance will render Mobile Home Parks in Redwood City an uncompetitive investment; and 5) vacancy control provides a windfall to mobile home sellers. Mr. Kuebelbeck, of Williams, Kuebelbeck & Associates Inc., answered Council questions regarding available loans, financial data of mobile home park owners, investment analyses used, and a fair and reasonable return on investment is typically 15 - 18%. Paul Deffebach, Western Mobilehome Association Representative, referred to the report he had submitted and advised that of the 491 spaces in all the parks in Redwood City, 409 were under long term leases for three more years and would be excluded from any rent control ordinance, and approximately sixty-one were trailers which would be excluded as well. Therefore, there were only 20 or 21 spaces that would be affected by any rent control ordinance. Mr. Deffebach advised that the current long term leases were a form of rent control negotiated between the owner and resident, and increases were tied to the CPl. Also, currently, 40% of spaces in Redwood City were being rented well below market levels. Councilwoman Steinfeld cited costs in the thousands borne by Hayward, Rohnert Park, and San Jose in administering rent control ordinances, and asked why so much staff work and time was being spent for 20 spaces. Councilwoman Steinfeld suggested a study session to determine why a rent control ordinance is needed at this time. Terry R. Dowdall, Santa Ana, California, representing Harbor Village Mobilehome Park, advised the Council he was the primary author of the leases that were negotiated in 1985 and described them as a voluntary system of rent regulation. Mr. Dowdall cited Birkenfeld v. City of Berkeley (1976) as the seminal rent control case in California which "established factual requirements which must exist to establish a legitimate rational connection for rent control under the police power clause of the California MINUTE BOOK NO. 51 Regular Meeting Minutes Page No. 266 December 14, 1992 Page 6