MHP Rent Control in 2023 Withdrawn, AB978 Litigation Proceeds

Assembly Bill 1035 is a statewide rent control bill.  AB 1035 limited rent increases to 5% in all non-rent-controlled mobilehome parks.  AB 1035 also froze rents on sale of  tenancy–but allows the departing sellers to sell their subsidized tenancy at non-subsidized prices.

The consumer is supposed to receive the value of a rent-controlled subsidized tenancy. Instead, AB 1035 makes the new tenant pay for it!

Thankfully, due to constitutional attack (as conceived at Dowdall Law Offices, A.P.C.) on AB978 legislation which also imposes unreviewable price ceilings, the authors of AB1035 have wisely withdrawn the bill from consideration this legislative session.

By handcuffing any adjustments for spiking economic conditions, AB 1035 would similarly, unconstitutionally, confiscate base rents set at “general market conditions” as legally required. It also cuts out any due process hearing for relief from the iron fist of government interdiction.

A key reason for the failure of AB 1035 this year is ongoing litigation involving a mobile home park known as “Anaheim Estates,” owned and operated by longtime friends of Dowdall Law offices A. P. C.  Based upon litigation against AB 978 (Dowdall Law Offices, A.P.C., serving as proposed amicus curiae), allegations of constitutional infirmity have been brought and await final resolution.  The litigation has many similarities to the issues under AB 1035.  It has therefore been suspended for now.

Leasehold premium as gate-money reflecting real value of rent subsidies:  As noted, AB 1035 freezes rent at sale of tenancy, while enabling departing tenants to force the home seeker to buy a subsidized tenancy at full non-controlled prices. Scarce commodities drive dysfunctional black markets.  Peer reviewed studies show that selling a subsidized tenancy at market generates huge ill-begotten profit. It is the same as a “key money” premium charged for transfers of rent-controlled residential tenancies (universally condemned profit on the suffering of captive others).

A demand for “key money” or “gate money” is plainly immoral.  One cannot receive a rent subsidy for hardship, then turn right around and re-sell the tenancy for market profits at real value. That is a subterfuge of rent control. But that is vacancy control when applied to mobilehome parks, because the home is tied to the space it is parked on. This is a regulatory taking. I devised this theory in the early 1980’s, now empirically proven several times,  and despite historical miscues in application and theory, remains irrefutably correct today.

The legitimized exploitation of tenancy sale of subsidized property at non-subsidized prices in California is so malignant, that elsewhere it is defined as a felony, like in New York.  Santa Cruz also recognized this—Santa Cruz!–and imposed ceilings on mobilehome sales as a condition for rent controls. The state of California has plumbed a deep moral abyss to consider standards so low and hypocritical.

AB 1035 also represented a take over of local city and county authorities that have not adopted rent controls: elected officials  that have declined to interfere with a housing market that works.  AB 1035 invades the sanctity of every city and county by forcing compulsory subsidies where none are deemed needed. The “wealth transfer” ordinances against mobilehome parks have been unwelcome in most of California jurisdictions. They recognize that rent control is universally condemned by economists.

The fact is that the voting majority (a faction) may enforce its will–its economic interests–by popular vote of elected representatives that promise allegiance to the faction. AB 1035 ignores any respect for local powers, and without any review or relief, simply out-muscles the will of local people who prefer the market to rent control, and certainly, reject subjugation by the state.

This is also a signal to private enterprise, that California’s legislators will with no hesitation invade private affairs of the citizens where they have no business at all. In California, “big brother” is a good thing to the dominant party. Imposing big government’s will on small communities manifests a relentless effort to subjugate and control others with whom you disagree. But “one size does not fit all” when it comes to local market conditions.

In mobilehome parks, the wealth transfer from rent control legitimizes departing tenants–like scalpers–to demand unregulated profits for subsidized property–the mobilehome  tenancies.  Worse yet, the victim is the consumer, the needy homebuyer.  AB 1035 was wisely deferred for this legislative session, and it is to the credit of the authors and all those involved, that the right decision was made at this time. However, AB 1035 will always be a bad idea.

-Terry R Dowdall