A federal court said living in a Goleta trailer park might have been a financial bonanza for residents, ruling that a local rent control ordinance set the price of mobile homes too low.
The 9th Circuit Court ruled in a 2-1 decision last month that the city of Goleta had kept the price of a local trailer park at 80 percent below market value, depriving its owners of profit. The court ordered the city to pay compensation to park owners Maureen Pierce and Daniel and Susan Guggenheim.
In the court opinion, Judge Jay Bybee said the rent control law went too far.
“The savings created by these below-market rents are transferred directly into the pockets of the incumbent mobile home tenants, who can now sell their mobile homes for almost 10 times their purchase price,” Bybee said.
The amount owed to the owners will be determined at a future hearing.
While Goleta has been ordered to pay damages for the ordinance, the city’s attorney Tim Giles said the city law was actually adopted from preexisting ordinances in Santa Barbara County.
The county enacted its first rent ordinances in 1979, amending them again in 1987. Pierce and the Guggenheims bought Ranch Mobile Estates in 1997, and would have fallen under county law. The city of Goleta was incorporated in 2002, at which time Giles said it was required by California law to also adopt county ordinances.
“When the city was incorporated, the first action that they took, in fact they’re required to take by the state, was to adopt all of the county codes,” Giles said. “The rent ordinance along with the rest of the county’s code became the city’s law.”
Though the park owners purchased the property under county law, the court found the city’s adoption of the ordinance damaged the owners. While it agreed the city law itself was constitutional, the court ruled the city was required to compensate citizens for any property the city takes.
“The mere fact that the park owners bought the park in its regulated state does not mean that the city has not taken property by regulation or that the park owners cannot bring such a claim,” Bybee said.
Bybee said the Fifth Amendment required the city compensate park owners, saying it “provides that ‘private property [shall not] be taken for public use, without just compensation.'”
Giles said the city will appeal the decision, and plans to file its petition this week.
“The city council has authorized us to ask for a full panel review … This decision was made by three judges only,” Giles said, noting the city’s appeal would be to a larger panel of judges.
Giles said the recent ruling could negatively impact cheap housing in Goleta.
“If this decision is allowed to stand it will affect a significant challenge in the city’s ability to try to provide affordable housing,” Giles said.