MINUTES OF MEETING
ASSEMBLY COMMITTEE ON COMMERCE
Sixty-seventh Session
April 14, 1993
The Assembly Committee on Commerce was called to order by Chairman Gene T. Porter at 2:30 p.m., Wednesday, April 14, 1993, in Room 207/208, Cashman Field Center, Las Vegas, Nevada. Exhibit A is the Meeting Agenda, Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Mr. Gene T. Porter, Chairman
Mr. Morse Arberry, Jr., Vice Chairman
Mr. Rick C. Bennett
Mr. John Bonaventura
Mr. Val Z. Garner
Ms. Chris Giunchigliani
Mr. Dean A. Heller
Mr. David E. Humke
Ms. Erin Kenny
Mr. Richard Perkins
COMMITTEE MEMBERS ABSENT:
Ms. Kathy M. Augustine
Mr. Scott Scherer
Ms. Myrna T. Williams
GUEST LEGISLATORS PRESENT:
Assemblyman William Petrak, District 18
STAFF MEMBERS PRESENT:
None
OTHERS PRESENT:
Mr. Don Schlesinger, Commissioner, District F, Clark County; Ms. Jeannie Deeg, State Secretary, Mobilehome Owners League of the Silver State; Mr. Melvin S. Lipman; Ms. Heleana Gross, President, Senior Power and President, National American Notch Association; Mr. C. Edwin Fend, American Association of Retired Persons (AARP); Mr. Emil Pomich; Mr. C. Joseph Guild, III, Nevada Mobile Home Park Owners Association; Mr. Arvis Forrest; Ms. Eleanor Chambers; Mr. Bill Iverson; Ms. Kathleen Smith; Ms. Connie Orton; Mr. Bill Ruff; Mr. Dee Burdell;
ASSEMBLY BILL 187 - Limits increase in rent for mobile home lots in certain counties.
Mr. Don Schlesinger, Commissioner, District F, Clark County, testified. He advised he was testifying as an individual and not on behalf of the Board of County Commissioners. He said there were eight mobile home parks in his district. He stated he wished to provide the background of what he perceived as an overwhelming need for legislation such as AB 187.
Mr. Schlesinger quoted a passage from a United States Supreme Court opinion as follows: "The term 'mobile home' is somewhat misleading. Mobile homes are largely immobile as a practical matter because the cost of moving one is often a significant fraction of the value of the mobile home itself. They are generally placed permanently in parks. Once in place, only about one in every hundred mobile homes is ever moved. A mobile home owner typically rents a plot of land called a pad from the owner of a mobile home park. The park owner provides private roads within the park, common facilities. The mobile home owner often invests in specific improvements such as a driveway, steps, walkway, porches or landscaping. When the mobile home owner wishes to move, the mobile home is usually sold in place, and the purchaser continues to rent the pad on which the mobile home is located."
Mr. Schlesinger read excerpts from an article in The Urban Lawyer (Exhibit C). Mr. Schlesinger said he felt it critical to note that ownership (of a mobile home space) existed "on both sides" and stated the owner of a mobile home had a greater ownership interest (in the space) in many respects than the owner of the land.
Mr. Schlesinger read additional excerpts from Exhibit C. He quoted the concluding remarks from a Florida appellate court decision as follows: "The mobile home space rental regulations of the past decade constitute a readjustment of benefits and burdens in response to the monopoly-like realities of the park-owner mobile-home-owner relationship. They involve a fundamental institutional home ownership and a situation in which the tenants are immobile homeowners with an investment three times as great as the investment of their landlords. These relationships were created by the park owners in order to develop their land investments into profit making ventures. It is understandable that park owners would prefer not to be severely regulated, especially as to such basic matters as the rent that they charge and the assignability of the rental interests in their spaces. However, their invitation of immovable investments, with the understanding that these investments would be the shelter and major asset of low and moderate income households, made the regulations that followed virtually inevitable."
Mr. Schlesinger referred to a document concerning the Consumer Price Index (CPI) and Cost of Living index for Las Vegas (Exhibit D) and pointed out there was a 9.8 percent increase in the CPI and a 10.2 percent increase in the cost of living between the years 1989 and 1991. He further pointed out between the years 1991 and 1992, the CPI increase fell to 1.4 percent and the cost of living increase fell to 1.3 percent.
Mr. Schlesinger stated during the period 1989 through 1991, rent increases exceeded the CPI increases for 63.8 percent of all mobile home spaces in Clark County. He provided a document entitled "Summary of Mobile Home Parks that Exceeded CPI 1989-1991" (Exhibit E) in support of his statement. He advised Exhibit E was prepared by an accountant and was utilized during testimony before the Clark County Commission. Mr. Schlesinger suggested Exhibit E clearly demonstrated that residents of mobile home parks were suffering rent increases in amounts well above the CPI. He stated the problem had grown worse during the past year when rents throughout Clark County had increased by an average of seven percent and in senior citizen mobile home parks by ten percent while the CPI had increased by only 1.4 percent. Mr. Schlesinger cited specific percentages by which rents had increased in various parks since the time of the hearing before the Clark County Commission and advised the figures quoted were obtained from the state's Manufactured Housing Division. Mr. Schlesinger posed the question, "Who benefits from these excessive rental increases?" and stated 69.3 percent of all Clark County mobile home spaces were owned by out-of-state interests. He stated when neighboring states adopted rent regulation ordinances and Nevada did not, Nevada was at a competitive disadvantage. He named some mobile home parks in his district which had out-of-state owners.
Mr. Schlesinger said the senior citizens of the community suffered (because of rent increases). He advised a recent study conducted of the city of Los Angeles, California, indicated the mean age of mobile home residents was 67 years and of apartment dwellers was 42 years.
Mr. Schlesinger discussed the six main arguments against legislation such as AB 187. He advised the first argument was that such legislation constituted rent control. He stated if AB 187 represented rent control in its restrictive form, he would not support the bill. He advised AB 187 constituted "rent justification" and allowed a landlord a fair rate of return and recovery of costs on needed park improvements.
He stated the second argument was "What comes next? Apartments?". He proposed there were substantial differences, previously discussed, between the apartment rental and mobile home space rental industries. He discussed the difficulties of relocating experienced by a mobile home owner who received a rent increase he could not afford as opposed to those of an apartment dweller. He suggested if the legislation proposed in AB 187 included apartments, he and many other public officials would oppose the legislation.
Mr. Schlesinger stated the third argument was if the tenant of a mobile home space was unhappy, he should move. He said that argument had already been addressed.
He advised the fourth argument was if not enough new mobile home spaces were being built to increase competition, it was the fault of restrictive zoning laws. Mr. Schlesinger read into the record a memo he received from Bonnie Rinaldi of the Clark County Zoning Division (Exhibit F). He then read a portion of a letter from Bonnie Rinaldi to Mr. Tim Behrendt (Exhibit G). Mr. Schlesinger suggested the true reason not enough new mobile home spaces were built was that if 18 apartment units could be built on an acre of land as opposed to six or seven mobile home spaces, building apartment units would be chosen over building mobile home spaces.
Mr. Schlesinger said the fifth argument was laws were in place to help needy mobile home park dwellers. He said other individuals could address that issue better than he.
Mr. Schlesinger stated the sixth and final argument was should the legislature pass AB 187, economic disaster would befall the state of Nevada. He advised there were 18,000 mobile home spaces and 134 mobile home parks in Clark County which, collectively, accounted for only 4/10 of one percent of the total assessed valuation in the county.
Mr. Schlesinger advised both the Reno Gazette Journal and the Las Vegas Sun had previously endorsed legislation such as AB 187. He read an article written by Mr. Scott Craigie which appeared in the Las Vegas Review-Journal on October 31, 1982, (Exhibit H).
Mr. Schlesinger said everyone was familiar with the arguments against AB 187, but at some point the approach (to the problem of excessive rent increases) represented by AB 187 must be attempted.
Assemblyman William Petrak, District 18, testified. Mr. Petrak explained the reason for the proposed amendment to section 13 of AB 187 (Exhibit I ) to delete "1996" and insert in place thereof "1997," was that the legislature would not be in session in 1996 but would be in 1997.
Mr. Petrak said the "rent gouging tactics" of park owners affected young families and thousands of senior citizens living on fixed incomes. He cited as an example a mobile home park with 371 spaces which in 1988, reported a profit of $522,000, representing a monthly profit of $117 per space. He advised space rent in the park was $185 per month in 1988 and $305 per month in 1992, and stated the average annual rent increase was more than 20 percent.
Mr. Petrak stated he spoke with employees of the city of Escondido, California, who informed him the city's cost to process an application for rent increase was $700. He stated at the hearing on AB 187 held in Carson City, an opponent of AB 187 declared its cost to government would be in excess of $800,000. Mr. Petrak said in Carson, Washoe and Clark counties "...our operation.....can be handled on a very conservative, fiscally responsible base." He indicated the $750 plus $1 per space application fee provided by a proposed amendment to AB 187 (Exhibit I) was more than adequate to cover any costs the state incurred in administering the provisions of AB 187.
Mr. Petrak suggested if park residents retained the monies they paid for rent increases imposed by out-of-state park owners, they would spend those monies in ways which would generate revenue to the state of Nevada. He declared Nevada was losing millions of dollars in revenue.
Mr. Petrak asked for the committee's approval of AB 187.
Ms. Jeannie Deeg, State Secretary, Mobilehome Owners League of the Silver State, testified by reading from prepared text (Exhibit J).
Mr. Melvin S. Lipman testified by reading from prepared text (Exhibit K).
Ms. Heleana Gross, President, Senior Power and President, National American Notch Association, testified.
She advised "Notch" individuals had limited incomes and received less money than most individuals.
She explained "Senior Power." She stated seniors had so many problems they elected to join forces and work together "under one umbrella." She said the organization had more than 6,000 members, was recruiting more senior organizations locally, and planned to become a statewide organization.
She expressed support for AB 187.
Ms. Gross said individuals living in mobile homes were not asking for a handout or for rent control. She said those individuals were not drug addicts or those who spread AIDS, robbed banks, committed murders or rioted when a bill was not favorable to them but were senior citizens who wished to live in a nice environment and maintain their dignity. She advised senior citizens who lived in mobile home parks in Las Vegas constituted the largest number of volunteers in the city and gave examples of volunteer work such senior citizens did. She said if AB 187 was passed, it would help those senior citizens.
Ms. Gross advised she had never lived in a mobile home, but members of Senior Power had sympathy for and stood up for those who did and suggested the legislators should do the same.
Mr. C. Edwin Fend, American Association of Retired Persons (AARP), testified. He advised AARP supported AB 187. He suggested AB 187 would assist not only the elderly but also individuals with low incomes who were raising families and were employed in service jobs paying minimum wage or slightly more. He said attempts to provide public housing for the elderly and those with low incomes had been basically unsuccessful.
He stated the association was not attempting to prevent park owners from making profits but was asking some limitations be placed on the amounts by which park owners could increase rents. He said the association wished to encourage people, both in Reno and Las Vegas, to "fill up the designated spaces" with additional mobile home parks in order to provide low income housing for the elderly and for low income workers. He said it appeared the rent increase provided by AB 187 would afford park owners adequate increases in their margins of profit.
Mr. Fend said the association encouraged park owners to continue to improve and change their parks and said AB 187 contained provisions which would allow park owners to defray the costs of such changes and improvements.
He said many park owners did not fall in the category of "gougers" and AB 187 was not directed at them, but with respect to those park owners who did fall in that category, some control was needed.
Mr. Fend contended a problem of supply and demand existed, particularly in Las Vegas and Reno. He suggested the supply (of mobile spaces) was low and the demand high and for that reason rent increases frequently went unchallenged. He proposed if AB 187 was passed and people were encouraged to build more mobile home parks, the principle of supply and demand would prevail.
He expressed hope the legislature would pass AB 187.
Mr. Emil Pomich testified. He said he resided in Heritage Mobile Home Park. He stated when he moved into the park, it advertised rent of $179 a month with no increases, but he had now lived in the park 12 years and was paying more than double his original rent.
Mr. Pomich advised this year, tenants in Heritage Mobile Home Park had been presented with a new lease and told it must be signed by the last day of December, although the present lease would not expire until February. He stated the lease, which provided for increases of four to nine percent plus an additional $8 per month over a period of four to five years, advised any law passed regarding rent increases would be inapplicable if the lease was signed. He indicated the lease also included a provision that a loan would be obtained for any work done in the park and the tenants of each space would be charged an amount toward the loan at 20 percent interest. Mr. Pomich stated he did not sign the lease, and his rent was increased from $334 to $374.
He said his rent was increased by at least 10 percent each year. He related when new owners had acquired the park, they attempted to raise rents by 11 1/2 percent and advised the tenants of amounts the owners had paid for taxes, insurance and other expenses. Mr. Pomich advised a park tenant obtained information from county offices of the actual amounts expended by the new owners and those amounts were less than the owners had stated. He indicated after discussions were held with the owners regarding the discrepancies, the rent increase was reduced from 11 1/2 percent to 11 1/4 percent.
Mr. C. Joseph Guild, III, Nevada Mobile Home Park Owners Association, testified. He advised a study of Clark County rent increase statistics for the preceding four years (Exhibit L) indicated increases in two-thirds of all mobile home parks in Clark County were within $15 of a COLA based maximum rent increase for the same period. He indicated the same numbers and source were used (to arrive at this conclusion) as Mr. Schlesinger had used.
Mr. Guild provided copies of petitions signed by members of the Nevada Apartment Association (Exhibit M, collectively), a letter from the Nevada Apartment Association, Inc. (Exhibit N), and petitions signed by members of the Southern Nevada Homebuilder's Association (Exhibit O, collectively), all in opposition to AB 187.
Mr. Arvis Forrest testified. He advised he owned two mobile home parks and had leases with the tenants of those parks which guaranteed no rent increase would exceed the COLA increase, but which provided, in addition, should a large tax be imposed on one of the parks, that cost could be passed on to the tenants. He stated his parks were in competition with condominiums and apartments and he wished to keep his rents reasonable and his tenants happy.
Mr. Forrest said it was costly to build a mobile home park at this time and such an investment required a return.
Ms. Eleanor Chambers testified by reading from prepared text (Exhibit P).
Mr. Bill Iverson testified. He said he was co-owner and manager of Villa Borega Mobile Home Community (Villa Borega). He advised Villa Borega was an adult mobile home community, built in 1980, and consisted of 293 spaces on 40 acres of land. He stated Villa Borega had standard amenities, consisting of a clubhouse, swimming pool, hot tub, craft room, library, wood shop and tennis court, and would be considered a five star park if parks were rated in that manner at this time.
Mr. Iverson said the original lease in Villa Borega was a 10 year lease with 5 year options, which could result in a 30 year lease.
He indicated rent increases in Villa Borega were based on the Consumer Price Index (CPI) and rent was increased once a year on the anniversary of a mobile home's entry into the park. He indicated due to the time required to receive information on the CPI from the federal government, time required to compute adjustments and the legal requirement that a 90 day notice of any rent increase be given, a CPI used as a basis for rent increases in Villa Borega was six months old. He stated Villa Borega passed on increases to tenants at the rate of 100 percent (of the CPI increase) up to five percent and 90 percent of any additional increase. He advised, in addition to increases based on the CPI, Villa Borega had seven "pass through items": trash, water, sewer, natural gas, electricity, telephone and licenses and fees. He indicated if costs to the park for the "pass through items" exceeded the CPI, those costs were passed on to the tenants.
Mr. Iverson advised the last notice of a rent increase in Villa Borega was based on the February, 1993, CPI, reflected a 3.3 percent rent increase effective July of 1993, and affected 24 spaces in the park. He indicated the average rent increase for those 24 spaces was $11.60, with the lowest increase being $10.80 and the highest $13.29. He said in addition to the rent increase based on the CPI, there would be an increase of $6.16 for those "pass through items" previously enumerated, resulting in a total average rent increase of $17.67. He proposed if the park was allowed to pass on to tenants only an amount equal to or less than the CPI for Las Vegas, the park would have a deficit of 1.16 percent.
Mr. Iverson cited the following percentages by which the park's costs for "pass through" items had increased from 1991 to 1992: trash by 26 percent; water by 20 percent; sewer charges by 25 percent; electricity by 12 percent; telephone service by 36 percent; and license fees and charges by 67 percent. He indicated the park's cost for natural gas had decreased by two percent during the same period. He advised the total increase in the park's operating costs for the items listed was 22 percent.
Mr. Iverson pointed out the "old travel court businesses" in east Las Vegas had evolved into motels and then into travel lodges and said mobile home parks had a similar history, having begun as trailer courts and evolved first into mobile home parks and then into mobile home communities. He stated mobile home communities were very expensive to build and operate and it had become difficult to attract investors to such ventures. He said mobile home parks were not a cheap way to live but were an alternative life style.
Mr. Bonaventura asked if Mr. Schlesinger's statistics, reflecting a 16.67 percent increase in rents in Villa Borega during the period 1989 to 1991, were accurate. Mr. Iverson stated he was unable to say Mr. Schlesinger's statistics were correct. He said he did not know where Mr. Schlesinger had obtained his information. Mr. Iverson advised rent increases in Villa Borega over the previous 13 years had approximated four to five percent.
Ms. Kathleen Smith testified by reading from a letter to the Clark County Board of Commissioners (Exhibit Q).
Ms. Connie Orton testified, out of order, on Assembly Bill 334 by reading from prepared text (Exhibit R).
Mr. Bill Ruff testified. He advised the average rent for a double-wide mobile home space in Clark County was $252 a month. He stated rent in the mobile home park he owned was $249 a month. He declared he did not wish to be penalized "because of one over $400 rent in the whole state."
Mr. Ruff stated there were 434 mobile home parks in Nevada and 136 mobile home parks in Clark County and suggested everyone should be able to find a place in which to live.
Mr. Ruff gave details concerning the building of the mobile home park he and his partners owned. He stated he first bought land for the park in 1963 and advised the last loan on the park was paid off in 1987. He said neither he nor his partners made any profits from the park during the years 1963 to 1987.
Mr. Ruff suggested the prospect of rent control was one reason no mobile home parks were being built and indicated if he had money to build another park, he would not do so.
He spoke of a mobile home park the Jaycees were building. He advised the Jaycees leased land for the park at $10 a year, received a grant in the sum of $321,000, and received a $6.2 million loan guarantee from the Clark County Housing Authority. He said rent in the Jaycees' park would be $167 a month and speculated what the rent might be had the Jaycee's not acquired land for $10 a year, not received a grant and not received other assistance, declaring the rent would not be $167 per month.
Mr. Ruff said the Operating Engineers Union also intended to build a mobile home park. He suggested the union had money to do so through its pension fund and proposed few people had access to similar funds. He stated the threat of rent control was the reason new mobile home parks were not being built.
Assemblyman William Petrak again testified. He stated there were 10 mobile home parks in District 18. He indicated in many parks, tenants were told if they did not sign the leases proffered to them, their rents would be increased to amounts higher than those specified in the leases. He mentioned one park had increased space rent by $65 a month two years previously and the past year had increased rent by $45 a month.
Mr. Dee Burdell testified. She stated "rent gouging" was immoral and all that was asked (by those supporting AB 187) was fair treatment.
Chairman Porter closed the hearing on AB 187.
There being no further business before the committee, Chairman Porter adjourned the meeting.
RESPECTFULLY SUBMITTED,
________________________
SARA J. KAUFMAN
Committee Secretary.
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Assembly Committee on Commerce
April 14, 1993
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