MINUTES OF THE
SENATE COMMITTEE ON JUDICIARY
Sixty-seventh Session
June 18, 1993
The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 4:15 p.m., on Friday, June 18, 1993, in Room 119 of the Legislative Building, Carson City, Nevada. Exhibit A is the Meeting Agenda. Exhibit B is the Attendance Roster.
COMMITTEE MEMBERS PRESENT:
Senator Mark A. James, Chairman
Senator R. Hal Smith, Vice Chairman
Senator Lawrence E. Jacobsen
Senator Mike McGinness
Senator Dina Titus
Senator Raymond C. Shaffer
Senator Ernest E. Adler
GUEST LEGISLATORS PRESENT:
Assemblyman Wiliam A. Petrak
Assemblyman Gene T. Porter
Senator Lori Lipman Brown
STAFF MEMBERS PRESENT:
Dennis Neilander, Senior Research Analyst
Sherry Nesbitt, Committee Secretary
OTHERS PRESENT:
Lois Lazor, Member of the Public
Bob Olsen, Member of the Public
Bill and Shirley Richards, Members of the Public
Mae Thorpe, Member of the Public
Walt Bantz, Member of the Public
Ivor McQuen, Member of the Public
Norman Franz, Member of the Public
Betty and Austin Briggs, Members of the Public
Joan Clements, Manager, State of Nevada, Manufactured Housing
Division
Peter Echeverria, Member of the Public
Chris E. Harris, Lobbyist, Nevada Association of Realtors
Patsy S. Redmond, Lobbyist, Nevada Association of Realtors
Joreita Yahanan, Member of the Public
Graham Saheff, Member of the Public
Polly Saunders, Member of the Public
Shirley Watson, Member of the Public
Annie and Joe Grona, Members of the Public
Douglas Watson, Member of the Public
M.J. Monroe, Member of the Public
Marjoria Monroe, Member of the Public
Lisa Stowell, President, Coalition of Manufactured/Mobilehome
Owners of Nevada, Inc.
Kenneth W. Green, Member, Coalition of Manufactured/
Mobilehome Owners of Nevada, Inc.
Leatirce Burmer, Member, Coalition of Manufactured/Mobilehome
Owners of Nevada, Inc.
M. Warkunoski, Member of the Public
Paul P. Havas, Member of the Public
Barbara Gerry, Member, Coalition of Manufactured/Mobilehome
Owners of Nevada, Inc.
Mary Jo Wiese, Member, Coalition of Manufactured/Mobilehome
Owners of Nevada, Inc.
William Habomolet, Member of the Public
Dee Burdell, Vice-President, Legislation, Mobilehome Owners
League of the Silver State
Rita E. Hambleton, Lobbyist, American Association of
Retired Persons
Vickie Demas, Lobbyist, Mobilehome Owners League of the
Silver State, Inc.
Don Schlesinger, County Commissioner, Clark County
Jeannie Deeg, State Secretary, Mobilehome Owners League of the
Silver State
Frank Kujac, Member of the Public
John L. Allen, Member of the Public
William C. Allen, Member of the Public
Dale E. Littlejohns, Lobbyist, Northern Nevada Apartment
Association
Gerri Raup, Member of the Public
Joe Guild, Attorney
Bonnie James, Lobbyist, Las Vegas Chamber of Commerce
George Flint, Member of the Public
William Habernek, Member of the Public
Scott M. Craigie, Chief of Staff, State of Nevada, Office of
the Governor
Ivor McCuen, Member of the of Public
Senator James opened the hearing on Assembly Bill (A.B.) 187.
ASSEMBLY BILL 187: Limits increase in rent for mobile home lots in certain counties. (BDR 10-6)
Senator James declared that he would not be voting nor taking any part in advocating the passage or defeat of A.B. 187. He advised his law firm represents a number of mobile home parks in Clark County. For that reason, he sought the opinion of the Legislative Counsel Bureau (LCB) who determined, under the ethics rules, it would be inappropriate for him to vote on this measure. He stated the ethics rule does allow him to participate in chairing the hearing, which he will do, to be sure that both sides have a fair hearing of the issues presented.
Assemblyman William A. Petrak, the sponsor of the bill, presented testimony. Mr. Petrak stated that when he was 24 years-old, he was in the United States Army during World War II, for 54 months. For 28 years he was in private business, and in 1972 he was instrumental in starting the Ohio lottery. He worked with the state lottery in the executive and marketing departments for 13 years. He advised the reason for this background is because in all of his lifetime, he has never seen a person or a group of people, such as young families with children and retired seniors, who live in their mobile homes, and who are exposed to the shabby and rent gouging tactics of many mobile home park owners. He stated A.B. 187 will correct this injustice. He advised the frequent rent increases must stop. Mr. Petrak reviewed the bill, and each section thereof. He specifically advised that page 2, line 2, section 4, states that the provisions of this program apply only to counties whose population is more than 35,000. He advised this reflects the population by the federal census population taken in 1990. Therefore, Carson, Clark and Washoe counties would come under this provision. Mr. Petrak advised he believes A.B. 187 is fair to both the park owner and the mobile home owner.
Mr. George Flint, Member of the Public, provided testimony in support of A.B. 187. He advised that 2 years ago he was the prime lobbyist helping to move this concept. He stated most people, himself included, who are in the dilemma of yearly rent increases are the victims of their own innocence and naivete. He related that 17 years ago, he and his wife sold their home and relocated into a mobile home, in a quiet area. He stated the price of the home was reasonable, and the rent for the land was $128 per month. He said that, in his naivete, it never occurred to him that it would not stay that way. Seven years later, he and his wife moved out of that park, and the rent for the land was $496 per month. He stated it was not so much the $496 per month which made him move, as it was the constant frustration within the park itself, and the unstableness of the residents as to what would happen next. He paid over $10,000 to move his mobile home from Verdi, Nevada into Reno. When he moved into Verdi, the rent was $248 per month. He has just begun paying the new monthly rate for this year, which is $381 per month. He advised it is the unstableness and the lack of security, particularly on the part of the seniors, which is so difficult. He stated there are some really fine mobile home park owners, and most of them are Nevadans. It is not these people's intention to gouge the mobile home owners, to keep them frustrated, or to continually eat into the reserve seniors have after they pay their rent. He advised most of the problems are associated within mobile home parks owned by out-of-state and corporate owners who are only looking at the bottom line. He stated that this issue has been brought before the legislature for 10 years, and although the bills proposed have not been passed, possibly some park owners have been somewhat less abusive. He cited an example of the problems of mobile home owners by relating a situation which recently happened in Reno. A new park owner came in and raised the rent $75 per month the day he took over. He gave other examples of continual raises in rent. He advised these are the things A.B. 187 will stop. The bill will allow the reasonable park owners annual raises which are in excess of what they currently charge. He asked the committee to keep in mind that many of the mobile home owners are supportive of several of the park owners in the state. Mr. Flint advised that his park owner, who lives in Washington state, recently told Mr. Flint that the rent increases in Mr. Flint's park have allowed the owner to realize sufficient cash flow to exploit the investment of four more parks in the last 8 years. Mr. Flint asked the committee to remember that A.B. 187 is not rent control. Rather, this is a reasonable rent increase justification measure which will do away with current unfair practices of park owners. He predicted that the opposition will state that rent increases statewide are currently only 3 to 5 percent, and this is not a problem. He stated these increase averages are not figured with the entire state taken into consideration. They are averages taken from small parks, most of which have had no increases, or very few, and averaged together with the large parks having increases of up to 12 percent. Mr. Flint suggested that each member of the committee walk the parks and see what is actually occurring. He referred to a member of the assembly who voted against this proposal in 1991, and changed his vote after viewing some mobile home parks. Mr. Flint read from a statement by this assemblyman, written on June 7, 1993:
Thank you Mr. Speaker. I rise in support of Assembly Bill 187. We have heard from Clark County and we have heard from Washoe. Maybe it's time to hear a little bit from the rurals. I have some constituents sitting in the gallery today who are mobile home park owners. It would be my desire that all mobile home park owners are as dedicated, conscientious, responsible and caring as Jim and May Thorpe. Other mobile home park owners in my district are also caring, including the VanPattens and the Allens. The fact of the matter is, however, I spend time on weekends knocking on doors, going to mobile home parks. Unfortunately, not everybody is as nice as those individuals. I would urge my colleagues to support the bill.
Mr. Flint stated the problem is there is a land owner and a personal property owner. The personal property owner has very little in the way of rights. This person puts up a deck and trees and in some cases, invests thousands of dollars. However, the day this person moves in he or she has no more rights regarding what it will cost to stay there. Mr. Flint concluded with comments of Assemblyman Hardy on the assembly floor in 1991:
As legislators we are faced with a difficult task. We must in every action we take preserve the delicate balance between the rights of the individual and the rights of society as a whole. We must be certain that any law we pass doesn't benefit any individual or segment of society to the exclusion of another. And above all, we must be sure that our actions are minimally intrusive on society's right to life, liberty and the pursuit of happiness. The issue before us here today is a particularly difficult one. On one hand we have a property owner; one who owns a plot of land with all the rights and privileges associated with that ownership. On the other hand we have another property owner; one who owns a home with all the rights and privileges of that ownership. As a legislature, how do we protect the rights of one of those interests without infringing on the rights of another. I would suggest that we must strike a balance between the interests of the two. The best we can hope for is to provide equity in the law so that one party does not benefit at the expense of another. While this legislation is not perfect, it at least offers some vestige of equity as we, as the legislature, strive to protect the fundamental democratic right of all individuals to own property and to have that property protected by the law.
Mr. Flint advised the committee it is up to them to decide what is fair for both the mobile home owners and the park owners. He asked the committee to do their best to strike a balance of fairness between the two.
Don Schlesinger, County Commissioner, Clark County, provided testimony in support of A.B. 187. He advised the problems addressed by this bill are not going to disappear, and have gone on session after session. He advised he would present facts and figures which will clearly demonstrate that not only is the problem not going away, but is getting worse. He quoted from a recent supreme court opinion, City vs. Escondido:
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 1 in 100 mobile homes is ever moved.
Mr. Schlesinger cited a few passages from an article which recently appeared in the law journal, The Urban Lawyer:
The cost of moving these mobile home units and setting them up in their spaces is substantial. The cost for set up and associated improvements for such items as the cement foundation, car ports, steps, porches and landscaping are typical in the range of $5,000 to $15,000.
Mr. Schlesinger stated this shows that not only is the moving of the unit involved, but also the additional expense of set up. He advised mobile home space rent regulations, granting mobile home owners the right to sell their mobile homes in place, became widespread in a response to concerns about mobile home owners' interests. Approximately 70 California cities have adopted mobile home space rent controls. Other states with municipal rent ordinances include New Jersey and Massachusetts. Florida recently enacted legislation which authorizes courts to refuse to enforce unreasonable mobile home space rents.
Mr. Schlesinger advised that, as a result of the impracticability of moving mobile homes, park owners may obtain quasi-rent in addition to competitive rents. Quasi-rent was described in The Urban Lawyer as rent that can be charged by a mobile home park owner above and beyond the fair market value. The park owner can charge that quasi-rent because it is known that the relocation costs are so substantial that a mobile home owner will have to have rent increased so much before the cost of relocation becomes an economically viable alternative to staying in place and absorbing those higher rents.
Mr. Schlesinger quoted further from The Urban Lawyer:
Other things being equal, a mobile home owner is better off paying an additional $100 to $150 in space rent to stay in place rather than moving.
Mr. Schlesinger quoted from a recent Florida supreme court decision, upholding a Florida statute:
Where rent increase by a park owner is a unilateral act imposed upon all tenants on an across the board basis, imposed after the initial rental agreement has been entered into, park residents have little choice but to accept this increase. They must accept it, or in many cases, sell their homes and undertake the considerable expense and burden of uprooting and moving. The absence of meaningful choice for these residents who find the rent increased after their mobile homes have become affixed to the land serves to meet the class action requirement of procedural unconscionability.
Mr. Schlesinger advised the Florida court subsequently commented:
Because of the difficulties inherent in moving the home from one settled location to another, it is hard to imagine a situation where the park owner and the tenants are in an equal bargaining position on rent increases.
Mr. Schlesinger stated what Mr. Flint was talking about was exactly what courts and other state legislatures have grappled with and resolved over the years. There must be a balancing of the interests in this very unusual setting between, on the one hand, a mobile home park owner who has made an investment and has a right to a fair rate of return; and on the other hand, a mobile home owner, who also has made a substantial investment. He advised a study done in the city of Los Angeles found that the mobile home owners had an investment three times as great as that of the mobile home park owner. Therefore, there are property interests on both sides. Mr. Schlesinger advised it is the balance of those interests which the committee is asked to consider.
Mr. Schlesinger provided facts pertinent to Clark County. He advised he was speaking only in his individual capacity, and not on behalf of the board of county commissioners. He advised he introduced an ordinance before the Clark County Commission in the past year. He advised he would briefly restate much of the findings which went into the drafting of that ordinance, and would update the findings with new facts and figures in the last calendar year. He advised going into last year, it was found, in Clark County, that 63.8 percent of all mobile home spaces had suffered rent increases between 1989 and 1991 in excess of the increase of the Consumer Price Index (CPI) for that same period. He stated these figures were obtained from the State of Nevada Manufactured Housing Division, on an across the board basis. He said the updated figures through 1992 show 71.3 percent of all mobile home spaces in Clark County suffered rent increases, in excess of the increase of the CPI for that same period. He stated the average increase in rent for a single wide mobile home in the past year was 7 percent, while the CPI was 7 percent or less. For senior parks, the increase was 10 percent in the last year. He stated this disturbing trend calls for new and bold action by the state senate in the 1993 legislative session. He addressed who benefits and who suffers from the status quo. His studies found that nearly 70 percent of all Clark County mobile home spaces were owned by out-of-state interests. He advised in his commission district alone, 75 percent of all mobile home parks are owned by out-of-state interests. He gave several specific examples of individual mobile home parks in his district. He advised these numbers do not always show an accurate picture. If these are averages, the people on the upper end of rent increases are in even more desperate straits, and are the people who most desperately need the support and assistance of the legislature. He stated most residents of mobile home parks are senior citizens. He advised a recent study in Los Angeles found that the mean age of mobile home residents is 67, compared, for example, with age 42 for apartments. Therefore, senior citizens, many living on fixed incomes, are the people suffering the extraordinary rent increases which are being sent out-of-state every month.
William Habernek, Member of the Public, provided testimony. He advised, using statistics from the State of Nevada Manufactured Housing Division, there are 445 parks with 32,692 spaces in the state of Nevada, 67.9 percent of which are in the counties impacted by A.B. 187. He stated one-half of those owners did not even reach the CPI increase. Therefore 151 parks would be impacted, which account for 53-1/2 percent of the spaces. A copy of the statistics referred to by Mr. Habernek is attached as Exhibit C. Mr. Habernek reviewed all of the figures included in this exhibit. He advised A.B. 187 would give the park owner a fair rate of return. He stated the senior citizens have seen their interest rates drop from 8 to 10 percent on a certificate of deposit down to 3 to 5 percent.
Senator McGinness asked of the 151 parks which exceeded the index, how many are in Clark County, and Mr. Habernek replied 86 were in Clark County.
Mr. Schlesinger advised one reason the listing of parks on Exhibit C was provided was that it has been stated in the past that presentations before previous legislatures was anecdotal. There was no global sense of how pervasive was the problem.
Mr. Schlesinger advised that five or six main arguments against A.B. 187 would be heard by the committee. Argument number one would be rent control, which cannot be allowed in Nevada, because of what it will do to New York City and Berkeley. Mr. Schlesinger advised he lived in Berkeley when he was in law school. He agreed Berkeley should not be rent controlled, setting forth a certain amount and stating rents could not be raised above that figure regardless of the circumstances. He stated there was a disincentive to improve apartment complexes and a deterioration in housing. He advised A.B. 187 does not set an arbitrary limit above which no rent increases can be granted. It merely states that if rent increases are sought above a certain level, there is an administrative process which must be followed. It recognizes that there are interests on both sides which must be protected. He stated the second argument will be that if this is done for mobile homes, apartments will be next. He advised there is a world of difference between the tenancy situation in a mobile home park and that of apartments. In an apartment, when the landlord raises the rent too much, a tenant can move. The cost to move from a mobile home park is thousands of dollars. This is the absence of meaningful choice to distinguish this setting from other tenancy settings. He stated he would vigorously oppose any rent regulations on apartments. He stated the third argument will be that if tenant is unhappy, the tenant can move. He stated that argument has already been addressed. He advised the fourth argument will be if there is not enough new mobile home spaces each year to increase competition, it is Clark County's fault. He advised he recently received a memorandum from Bonnie Rinaldi, Clark County Zoning Administrator. This memorandum said accusations had been discussed that, through its zoning practices, Clark County was restricting the development of mobile home parks. Ms. Rinaldi stated she had reviewed zoning practices relative to mobile home parks, as she had participated in legislative hearings on this matter. She found that Clark County had approved hundreds of acres of mobile home parks and mobile home subdivision zoning. However, very little of the zoned land had actually been developed. When she inquired as to why actual development has not occurred, the most frequent response had been financing for this type of development is not available. Ms. Rinaldi also stated the reality is that if 18 units of an apartment development can be put on a acre of land, it is far more profitable than five to seven mobile home units. With density being a paramount issue in southern Nevada, market forces promote the development of apartment complexes and not mobile homes. He stated Clark County does not turn down mobile home park developments on a regular basis. He advised the fifth argument is that laws are in place to help the needy, and the need does not exist for this kind of drastic legislation. He stated he would defer to other speakers to respond to this allegation. He stated the final argument will be that if this legislation is passed, it will create economic disaster in Clark County. He advised he asked the Clark County Assessor what component of all the assessed value real property represents mobile home park development. He was told there are 18,000 mobile home spaces in Clark County, and 134 mobile home parks. This totals four-tenths of 1 percent of total assessed value in the county. He advised if A.B. 187 is passed, to afford some protection and balance the interests it would affect, at most, one-half of 1 percent of total assessed valuation.
Mr. Schlesinger stated, in conclusion, that this measure has been supported in the past by the Reno Gazette Journal and the Las Vegas Sun. Mr. Schlesinger read into the record a letter from Karen Hayes, Clark County Commissioner. A copy of this letter is attached as Exhibit D. Mr. Schlesinger read from an newspaper article entitled "Seniors Barely Survive Additional Rent Hikes":
On this Halloween day senior renters are suffering from the tricks rather than the holiday treats. October is just far enough in advance of this winter's legislative session to inspire rent increases. A round of rent hikes in January and February might generate new calls for rent justification and even the landlord's nightmare, rent control. Seniors living in Bonanza Village, a local mobile home park, just got notification of their new rent increase. One senior we talked to said her rent will jump another $25 per month. This senior is just out of the hospital, struggling to survive on her retirement while paying high hospital bills. She and her husband have already paid over $6,000 in medical bills and the worst is yet to come. Their social security just does not cover the costs. This couple sold their house back east and came to Las Vegas. They bought a mobile home and relaxed. Their budget seemed adequate to let them retire in modest comfort. Then came the medical bills and a series of rent increases. The husband is slaving away at a part-time job to pay off the hospital bills. They are living from check to check, and now comes the rent increase. 'It isn't like they're furnishing the roof over our heads,' she says, 'it's only the land.' Like many other seniors in the park this couple may have to sell the home, and live off the equity until the money runs out.
Mr. Schlesinger advised the author of this article is Scott Craigie, and that this article was published October 31, 1982. He said nothing has changed except for the worse. He stated what Assemblyman Petrak is asking the legislature to do is to act courageously and provide a chance, for a short period of time, to balance property interests. If in a few years from now, the legislature finds the system is not working properly under this piece of legislation, the legislation expires by its own terms. He stated if this piece of legislation is not processed this month, the problems will continue, and in 2 years, this legislation will again be proposed. He acknowledged that several legislators have voted against this proposal in the past. He asserted, however, that never before has such a compelling argument been made for this legislation. He advised the measure was overwhelming approved in a support of bi-partisanship in the assembly. He asked the Senate Committee on Judiciary to approve the measure and finally give relief to citizens who need the protection.
Senator Jacobsen asked if, over the years, the Clark County Commission has done anything in favor of the mobile home owners. He asked if the county commissioners have come to grips with the problem, or does the commission simply wish to give the problem to the legislature.
Mr. Schlesinger reiterated that he introduced an ordinance last year which was considered by the commission. He stated some of the arguments against the ordinance were that this was more properly a matter to be dealt with by the state legislature. This apparently convinced one or two of his colleagues, who were undecided regarding the ordinance. He stated that he, as an individual county commissioner, has done everything possible to deal with this situation. He has also communicated with certain landlords who have imposed extraordinary rent increases, asking them for fairness and reconsideration. He advised there has been no relief from those efforts.
Senator Jacobsen stated he asked the question because almost every legislative session has dealt with utilities, garbage, and services, all of which should be local responsibility. He stated he is somewhat surprised that A.B. 187 does not cover all of the counties. He stated the issue is nearly the same in every county, and therefore was surprised that a population requirement had been imposed.
Mr. Petrak responded that the rural counties in Nevada do not wish to get involved in any type of regulation, or with someone telling them that particular businesses are gouging and cheating the people. He stated his belief that with this legislation to the three largest counties in the state, a message can be sent that this type of thing will not happen. He stated that, in two years, if it is felt that nothing is being done regarding stopping the gouging and rent increases outside of the three counties, and something is going to be done by the legislators who represent those counties.
Senator Smith stated this was a more compelling presentation that he has heard in the past. He referred to the appreciation and assessed valuation of the properties, and that the owner goes to the marketplace when he or she wishes to dispose of the property. He stated the owner has had no control over the appreciation. He advised the cruelest tax he has had is inflation, which dictates what property is worth when it is sold. This makes a very significant difference in the price a property owner must capture to pay off what he or she has acquired. He asked Mr. Schlesinger how the owner would be protected. He gave the example of a person purchasing property at 45 years old and at 71 attempted to dispose of the property. The appreciation occurring over that period of time would make a significant increase in the rental faced.
Mr. Habernek stated he did much analysis on commercial acquisition when he was employed with an accounting firm. He stated it is based upon a capitalization rate. That is the net operating income, rental less operating expenses. Inflation has increased real estate prices, and many times hyper-inflation was experienced. He stated when that balloon burst, properties plummeted. He advised it is very common for a house bought 3 years ago to be worth only 50 percent today. He advised a person purchasing a mobile home park purchased 20 or 30 years ago could not have helped but make money on that investment. He stated A.B. 187 would not impact this. It might hurt people who bought property at the high point.
Senator McGinness asked Mr. Schlesinger if there is anything in the Nevada Revised Statutes (NRS) to stop a local entity from imposing these types of regulations on cities or counties.
Mr. Schlesinger replied an argument was made by Joe Guild, Attorney, before the board of county commissioners last summer, that there is legal analysis which would bar local governments from regulating rents. This argument was used successfully with some of Mr. Schlesinger's colleagues. They said Nevada is not like other states which have an across the board home rule. He stated one thing which has been frustrating as a county commissioner is that in the absence of that home rule power, oftentimes the state legislature is put in the uncomfortable position of having to micro-manage the counties. He stated Mr. Guild contended that in Clark County that the authority does not exist and that he would subject the commission to a lawsuit if that ordinance is adopted. He assumed Mr. Guild would tell the Senate Committee on Judiciary the same thing if asked that question, and that leads him to believe the legislature is the correct forum.
Senator Titus referred to Mr. Schlesinger's effort to accomplish this at the county level. She stated she and Mr. Petrak and several other people were supportive of those efforts, and tried to get a letter from legal counsel stating the county commission did have the authority to accomplish the goal. She stated it was believed a good legal standing existed to try this. She agreed with Mr. Schlesinger that the argument was that the county did not have the right to do this, and it was a state matter. She stated it is interesting that so often at the state level, the very same people have made just the opposite argument.
Mr. Schlesinger stated he suspected that, depending on the forum, the argument may shift as another attack on proposed legislation or ordinance. He stated his belief that the matter can be cleared up once and for all if the committee chooses to pass A.B. 187. There would then be no legal issue with which to deal.
Scott M. Craigie, Chief of Staff, State of Nevada, Office of the Governor, provided testimony in support of A.B. 187. Mr. Craigie stated Governor Miller is very conservative regarding issues dealing with government involvement in the private sector. However, through the advocacy and discussions Governor Miller has had, especially with Assemblyman Porter, Senator Titus and Assemblyman Petrak, the Governor has concluded that this is a step which is necessary in Nevada. Mr. Craigie advised when this bill was introduced in 1991, the Governor remained relative neutral. Today, the Governor sent Mr. Craigie to testify in favor of the bill. Mr. Craigie stated there are places where regulation is appropriate, where the government should and does become involved. He cited utilities as the obvious example. He stated it is not always in monopoly situations where the government should become involved. There are competitive markets where, because of government action and situations in that business marketplace, government should become involved. He gave the example of the regulation of limousines in Nevada. The reason for this is that government defines and protects, from undue competition, a marketplace for a group of businesses. Mr. Craigie stated mobile home park owners do have some government involvement in defining and protecting their market. Zoning laws limit park location, and in some cases in some areas, especially in northern Nevada, make it difficult for competitors to come into the marketplace. Zoning laws also limit where the person who buys that mobile home can place that home. Mr. Craigie further advised that there are areas in northern Nevada, for example, where it is possible to put a mobile home on a lot bought and owned separate of others, but for the most part a person buying a mobile home cannot simply place it anywhere. To an extent, our own government's rules direct where that mobile home needs to be placed, and in many cases, makes it an advantage to the park owner over an individually purchased lot for that location. He stated some communities limit the number of parks. And finally, tenants, once they move into a park where they do not own the land are, for the reasons Senator Smith mentioned, captive. It is very expensive to move a mobile home from one location to another. He advised in many cases, government does direct people into that captivity. Therefore, government does have an appropriate role to watch, protect and ensure that the pricing in that competitive marketplace is similar to what it would be if it were a totally open market.
Mr. Craigie advised another issue is the fact that tenants do feel helpless. Nearly one-third of the park owners in Nevada are from out-of-state. He stated this does not make them bad people, but gives the tenant a feeling of distance from the person making the decisions regarding the place they live and the price they pay for their home. He reiterated that there is a captive nature to the relationship because of the price of moving out. He advised language in NRS 118b protects against an owner just clearing the park out and leaving the tenant to find a new location. There is not, however, any protection for that person against unfair pricing practices. He stated that owners of the parks literally own communities. Communities which others live in is owned, or at least run, by elected officials. When a lot is purchased, the owner is responsible for the economic condition of that lot. Other rules are imposed on the property owner by publicly elected officials. Mobile home park owners are not publicly elected, and tenants feel they are not as responsible as those who own and control other areas. Mr. Craigie stated this is a very important difference for them. He stated this helpless feeling is reinforced when the price for the home payment climbs. Tenants are caught as the innocent parties in the midst of the buy-sell cycle of the parks, even though this is a normal thing which happens in the private sector investment community. He stated the way this cycle works is that the price of the park will be based upon the revenue stream less the expenses. If the price can be increased over a short period of time and show the profit margin to be somewhat greater, the purchase price of that park is increased. This is good for the seller, and easy to do because the owner can increase the price without any kind of balancing or counter-balancing change by the tenant. He advised that when the buyer purchases the property, the debt level is greater than what was there before. The rents must be increased to cover the debt and to cover the buyer's own profit. As the cycle of buy-sell occurs, tenants in parks for 10 or 15 years are hit regularly and the base builds each time. There are tenants who have relatively small increases each year, however, these increases accumulate and become a base over which they have no control. A private home mortgage holder knows what the mortgage will be. Even with a variable rate, it is known that the rate will go up or down depending on what happens with inflation. This is not true for the tenants of mobile home parks. He advised the tenants have no control, because market forces which usually operate do not operate in this situation. Mr. Craigie stated, in summary, that government protects the park owners' business in various ways. Further, there are pricing patterns which exist in this government assisted market which can and do unfairly burden tenants. Mr. Craigie stated these are the two most important conditions, and he would add a third, which he believes is a very practical consideration. He stated there is enormous political pressure building on this issue. He stated his belief that the 1982 article which was read reinforces this, as does the activity before the Clark County Commission. One of the concerns he had when he went to the Public Service Commission following great public pressure on consumer issues, was that the change might be so harsh and drastic that it might destroy those companies. He advised if some reasonable steps are not taken to release the pressure on this rents issue, he believes an issue may arise wherein the resolution, once it is politically correct to do, could be something that would be too rough. It could truly hurt the marketplace, both for those who own mobile homes and those who own mobile home parks. He stated for those reasons, Governor Miller does believe that A.B. 187 should pass. He added, as an aside, that he firmly supports the harassment bill which will be heard later in this hearing. He stated he sought the introduction of a similar bill when he was outside of government, and once while he was at the Public Service Commission. He stated his belief that of all the bills in the legislature, this and A.B. 187 may be two that are the longest overdue.
Senator Titus stated legislators have received many letters from realtors who argue that A.B. 187 is a bad thing, that it is rent control, and will open the door for rent control of apartments. She advised those who have advocated this for mobile home parks have made the point over and over on the record, saying this is very different,
and that rent control for apartments is not supported. She asked Mr. Craigie to comment on this issue from the Governor's perspective.
Mr. Craigie stated he totally agrees with the bottom line, as stated by Senator Titus. This is a radically different marketplace. Apartments can be built much more readily and do not have a captive tenant. He stated a mobile home tenant will have to spend thousands of dollars to move. This is not true of an apartment tenant. He stated a first and reasonable step in this area has been attempted for a decade or more. He stated he did not believe that anyone would be able to go beyond anything done on a first step. He advised what is needed is a reasonable step to release the pressure so something more harsh will not have to be done in the future.
Assemblyman Gene T. Porter provided testimony in support of A.B. 187. He stated this was the ninth time in his political career that he has testified on this issue, and the reason is very simple. The first two times, his predecessor would not bring this bill for a vote. When his predecessor was not re-elected and Mr. Porter took his place, he brought the measure for a vote because it is an issue in which he believes. He asked the committee to frame the issue in the following context. He referred to a book written by Herbert Marcusa in 1963, entitled One Dimensional Man. In that book, Mr. Marcusa says the American dream was the greatest means of social control ever invented. The reason for that was because the American dream presupposes it has the element of choice, with which Mr. Marcusa disagrees. Americans have the right to choose between a Ford and a Chevrolet, or a blue or green car, but they do not have a right to choose between mass transit and whether or not to take a private automobile. That choice was made for them. Mr. Porter stated this analogy is equally applicable to those constituents of his who reside in mobile home parks. He stated the Las Vegas Review Journal has opined, on several occasions, the opposite of Mr. Porter's premise and that of Mr. Marcusa. The Review Journal suggested that these people made their choice years ago, when they decided to invest in a mobile home and place it upon a particular parcel of property. The Review Journal opined that once people make that selection, they are condemned to market forces, that market forces will fluctuate, and the people should have known going in that they would be subjected to market increases. Mr. Porter stated this reminded him of a scene from the movie "Airplane." The airplane is about to crash, and a man and woman are debating. The gentleman said, "they bought their ticket, they paid their money, they took their chances, I say let 'em crash." Mr. Porter stated the issue before the committee is one of fact. These people have their investments in a mobile home. He agrees this is a choice they made and they now live with that choice. However, the fact remains that for most of those tenants, a rental increase pre-supposes they have a choice, to either pay the increase or move. If a person on a fixed income gets a rental increase, and it costs more to move that person's investment than the person has, then the Marcusa situation occurs. The person does not have the choice, but only the illusion of choice. He advised most of these people suffer from that illusion. He stated there are very wealthy people in parks within his district, but there are also some very poor ones as well. He advised in the 1991 legislative session, as a compromise measure with the industry and the advocates of A.B. 187, an agreement was reached on a fund. A subsidy would be created for the tenants of the parks who could not afford to pay their rent. Mr. Porter advised the opponents will say that the fund was created, that the fund should be allowed to work, and A.B. 187 should be forgotten. He advised the real issue is whether to decide this issue now or wait until 1995, 1997 or later. He stated regardless of arguments regarding market economics, free enterprise, and other reasons why this legislation should not be passed, the issue will not go away. He predicted that arguments will be heard that this legislation will discourage the building of new parks. He stated the last new park in Clark County was the Jaycee's park, built on Bureau of Land Management land. He advised this is not private enterprise, and there is not a large amount of people waiting to come in because of restrictive zoning laws. He advised that some mobile home park tenants have received a rent increase simply because this concept was being discussed. He stated his concern regarding how much longer these tenants will have to come to the legislature and to the county commissioners for help. These people do keep asking for help, and something must be done. He asked the committee to make a decision and find a way to help. He encouraged the committee to let A.B. 187 go to the floor of the senate, and give colleagues an opportunity to listen to the arguments pro and con, and decide whether this is the proper way to help these people.
Senator Shaffer asked if there is any legal recourse which could be taken to protect the apartment owners and others who have a concern that this issue might intrude into their businesses.
Mr. Porter stated that it was never, and is not now, his intent to expand this proposal to apartments, stick built homes, or any other sort of commercial structures or aspect of real estate. This proposal is designed for a select group of people. He did not know whether or not that makes it unconstitutional on protection grounds. He advised he has offered to write the language as restrictively as possible, and has offered letters of intent from the assembly. He has offered to create every safety net he can to demonstrate that this only applies to this small, select group of people. He stated he would hope that because of remarks on the record, a court, when faced with expansion of this proposal, would state that it was the legislative intent not to impact other aspects of the real estate market.
Senator Shaffer thought perhaps there was a way to do this in the statutes to create more comfort for the people in the apartments and other areas. Senator Shaffer stated he owns rental units, and therefore, has understands both sides. He stated he does feel strong compassion for these tenants in mobile home parks.
Senator Smith said he had seen, through the last two speakers, the heavy hand of government which creates the problem. The restrictions on mobile home parks creates their value and therefore the market price. He suggested perhaps the legislature should be exploring the zoning ordinances, so that a mobile home owner could own his or her own lot at an inexpensive price. He suggested the problem is not being addressed appropriately. He stated he is very sympathetic with the problems of tenants, but also with the right of ownership.
Mr. Porter stated he did not disagree. A property owner has rights, in a free market system, to charge whatever he or she desires for the property, depending on what the market will bear. He stated, however, that this is not a free market system. All players are not equally armed in this context. He stated defending free market theories in a theoretical context is fine, but this particular scenario must be taken out of theory, and viewed in a real world application. Therefore, the question is raised whether it is proper to tell the park owner what he or she can charge. He stated this must be balanced against the other aspect of the people who cannot afford to stay, nor to move. These people come asking for the compassion of government in a helping hand context, as opposed to the regulatory aspect of government on the other side. He stated he has come down on the side of the tenants, and quoted Wendel Williams, stating this is his reason for so doing. Mr. Williams said, "when human rights conflict with property rights, human rights should always prevail."
Senator Smith stated the problem he is addressing is that a mobile home is not a second class home. The homes are very attractive, and yet they are restricted to certain enclosed locations, rather than accepting them as a very good way to live. He stated he would like to arrive at a long term solution, if possible, which is fair to everyone. Mr. Porter said he understood, and stated he has grappled with the same issues.
Senator Titus referred to Senator Smith stating the need to look at zoning and the ability to build more parks. She recalled at the time the Clark County Commission defeated the rent justification measure, they promised on the record to look at those issues. She asked if part of the problem is that this has not materialized.
Mr. Porter stated he has heard that argument for 8 years. He has heard that zoning, competition and development is the problem. He now has heard that the threat of action is the problem.
Senator Titus referred to the statement that the threat is a problem. She advised a similar thing happened in District Seven, which has the most mobile home parks of any district in the state. Two of the mobile home parks in that district used this threat, trying to force the tenants to sign a lease which would go into effect before this legislature came in session.
Senator Adler stated he heard Mr. Porter saying is that mobile home parks are more like a public utility than real estate where the owner is entitled to a reasonable rate of return on the investment and Mr. Porter agreed.
Senator Adler asked for confirmation that Mr. Porter is stating this is not really analogous to an apartment house. Rather, it is more like hooking up a house to Nevada Power or Sierra Pacific, in that there is no real option as to disconnecting electrical service and installing an electrical generator.
Mr. Porter stated this is a very good way of characterizing the issue.
Senator Jacobsen referred to the subsidy program which had been created for the mobile home tenants. He asked if Mr. Porter knew how many people took advantage of this program.
Mr. Porter stated the program will not come on line until July l, 1993.
Mr. Petrak advised in his district, he has a mobile home park with approximately 600 spaces. The new park owners have, in the past 15 months, talked the mobile home owners into signing 15-year leases, with a minimum 4 percent and a maximum 8 percent rent increase each year, plus amenities. He advised there is a park in another district in which the owners are having their tenants sign a lifetime lease with a 4 percent minimum and a 9 percent maximum rent increase, plus amenities.
Lois Lazor, Member of the Public, provided testimony in support of A.B. 187. She advised she and her husband own a home in a mobile home park in Carson City. She stated that in her research she discovered there are over 28,000 homeowners and their families who live in mobile home parks in Nevada. When she and her husband put their home on a rented lot 8-1/2 years ago, it was a good idea. Everyone in the park was happy. She advised that now, they realize this is no longer a good idea. She has noticed from her research and reading that out-of-state investors are coming into Nevada and buying mobile home parks at an increased rate. She stated these people see the parks as a way to make a really good return on their investment. They are raising lot rents as high as they wish to make that good return, and there is nothing to stop them. She stated one out-of-state corporation made $3 million in profit in 1 year from mobile home park investment. She stated that corporation plans to buy more parks in Nevada. She advised the homeowners in the park, after the park is sold, are faced with an excessive rent increase, which they cannot afford. She stated it would be impossible to move her mobile home, and yet, she receives rent increases continuously. She stated the park owner should not be able to control the homeowner. She said this is not about someone who can pick up and leave. She asked the committee members to vote their consciences and correct this blight on the state of Nevada.
Rita Hambleton, Lobbyist, American Association of Retired Persons (AARP) provided testimony in support of A.B. 187. She advised AARP currently has 165,000 members in Nevada. The Nevada State Legislative Committee of AARP sets legislative priorities for those members, and a little over a year ago, set seven priorities. She stated one of these priorities reads as follows:
To support development of affordable housing for low income families.
She advised as a result of this, AARP in Nevada supports the passage of A.B. 187.
Senator Lori Lipman Brown provided testimony in support of A.B. 187. She stated there are a number of people in her district on fixed incomes, and a tremendous number of mobile homes. She has heard, even from mobile home park owners, that they sometimes purchase a park whose rental amounts are lower than the market, and feel they must up the rents. She stated when someone is on a fixed income and is trying to plan how to make their money go as far as possible for the rest of their life, they consider things such as a rent they can afford. They go into a park having less than the market rate of rentals because they cannot afford a higher rent. Once they are established in that park and cannot move, they are hit with a larger rent. Senator Brown stated she sees this as being fraudulent to people who are simply trying to plan out their retirement. She agreed with previous testimony that this bill not affecting apartments.
Assemblyman Petrak read into the record a letter from Helena Gross, President, Senior Power Coalition in southern Nevada. A copy of this letter is attached as Exhibit E.
Vickie Demas, Lobbyist, Mobilehome Owners League of the Silver State, Inc., provided testimony in support of A.B. 187. A copy of her verbatim testimony is attached as Exhibit F. Ms. Demas also presented to the committee a package of documents relating to mobile home parks and rent increases. A copy of this package is attached as Exhibit G.
Dee Burdell, Vice-President of Legislation, Mobilehome Owners League of the Silver State, provided testimony in support of A.B. 187. A copy of her verbatim testimony is attached as Exhibit H.
Jeannie Deeg, State Secretary, Mobilehome Owners League of the Silver State, provided testimony in support of A.B. 187. A copy of her verbatim testimony is attached as Exhibit I.
Lisa Stowell, President, Coalition of Manufactured/Mobilehome Owners of Nevada (C.O.M.M.O.N), provided testimony in support of A.B. 187. Her verbatim testimony is attached as Exhibit J. Ms. Stowell presented to the committee a report compiled by C.O.M.M.O.N., regarding the issues addressed by A.B. 187. A copy of this report is attached as Exhibit K.
Senator Jacobsen asked what taxes Ms. Stowell pays on her mobile home.
Ms. Stowell replied she pays a personal property tax of approximately $150 per year.
Senator James stated his intention, because of the lateness of the hour, to recess the hearing on A.B. 187, and reconvene the hearing on Saturday, June 19, 1993. He stated if anyone was present, either for or against the bill, who could not be present on Saturday, June 19, they could present testimony at this time.
Ivan McQuen, Member of the Public, provided testimony in opposition to A.B. 187. Mr. McQuen advised he is a mobile home park owner in Battle Mountain, Nevada. He stated the bill purports to affect only four counties, however at a later date could be expanded to include the entire state. He stated he believed this would be the case. He stated a proposal like A.B. 187 has been presented every 2 years since he has been in the business. He has been coming to the legislature every 2 years, with basically the same concern which has never been addressed, and is not addressed in A.B. 187. He referred to provisions of the federal Clean Water Act. He stated where this act has been enforced throughout the country, water rates have risen by as much as 300 to 400 percent, as new treatments have been mandated to bring water quality up to federal standards. He cited specific cases in Pennsylvania where water rates have quadrupled. He stated his concern has always been that bills such as A.B. 187 make no allowance for passing on city or county water increases to the park owner. He stated in the 14 years he has owned his park, the water rates have been increased twice, at $10.00 per month each time. He advised A.B. 187, as written, would allow him to raise his rent in any given year by a maximum of $3.50. If the water rate increased, because of federal provisions, by $30.00 per month, he would have to pay the difference. He stated he had spoken to some of the tenants present at the hearing, who had told him they felt he could pass on that kind of expense to tenants, as a cost incurred. Mr. McQuen stated that, according to the terms of A.B. 187, he could not pass on this cost. He stated the only thing mentioned in the bill is the Cost of Living Adjustment (COLA), and capital improvements. He agreed the stories presented at this hearing were sad, but did not see how one injustice could be answered with another. He stated if flat fees park owners must pay per space cannot be passed on in their entirety, this is a real injustice. He added that much has been heard about the plight of senior citizens. He suggested if that is a real reason for passing A.B. 187, the same argument holds true for senior citizens who are apartment dwellers. He stated it will only be a matter of time before those senior citizens will be telling the legislature they cannot afford that rent and increases, and the same arguments will apply. He disagreed with previous testimony stating that a person could move from an apartment for about $200. He stated if a person cannot afford the rent, for example $500, they cannot afford to move. Therefore, this argument is not valid, and those people will soon be looking for the same relief proposed in A.B. 187. Mr. McQuen referred to a portion of the bill stating a new owner could only raise the rent after 18 months, whereas if the existing owner kept the park, the rent could be raised every 12 months. He advised a new owner will always have unexpected expenses. He asked why that new owner would not be allowed to raise the rent for 18 months, whereas if the person who owned the park free and clear kept the park, the rents could be raised every 12 months. He suggested it appeared as though there was an intention to punish new owners. Mr. McQuen further asked if a person has a right to expect a reasonable return on an investment, in line with the Consumer Price Index (CPI), why would mobile home park owners be penalized because the federal government might not give Social Security recipients the COLA. He stated A.B. 187 does not address the real problems. He suggested if the real problem is out-of-state owners, a law should be passed to ban out-of-state owners, rather than to punish everyone.
Assemblyman Petrak referred to section 3, line 11 of the bill. He stated, according to that section, rent paid for a mobile home lot does not include any amount paid for water, electricity or any other utility and billed to the tenant of the mobile home. He stated, therefore, he felt Mr. McQuen misunderstood this provision.
Mr. McQuen stated his understanding that until very recently, water meters were not permitted in mobile home parks in the state of Nevada. Therefore, no parks which were built several years ago have water meters, and are not covered by the section referred to by Assemblyman Petrak. The water is not charged separately, but is included in the rent in at least 99 percent of the cases. Therefore, this expense cannot be passed on as though it were not a part of the rent.
Senator James confirmed there were no further questions from the committee, and closed the hearing on A.B. 187, to be continued on Saturday, June 19, 1993.
Senator James presented a request for committee introduction of Bill Draft Request (BDR) 2-2033, and explained the substance of the bill draft request.
SENATOR MCGINNESS MOVED FOR COMMITTEE INTRODUCTION OF BDR 2-2033.
SENATOR JACOBSEN SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS ADLER, SMITH AND TITUS WERE ABSENT FOR THE VOTE.)
* * * * *
Senator James advised that the assembly had amended Senate Bill (S.B.) 155, with Amendment No. 752.
SENATE BILL 155: Expands immunity from liability provided to certain persons who respond to emergencies. (BDR 3-1420)
Senator James asked if the committee would concur with the amendment. He advised the amendment only excludes medical personnel.
Senator Jacobsen stated this would create a problem in the rural areas because the emergency medical people are fire fighters. He stated his belief that the provisions needed to cover anyone who is a volunteer.
Senator James advised he had spoken to Assemblyman Sader, who indicated that the Assembly Committee on Judiciary understood that the people in the rural areas of northern Nevada are all defined as being fire fighters, and therefore would be covered by the amended language. He stated this would only affect people in other areas of the state, principally Clark County, where the fire fighters are not defined as emergency providers. He advised that the good samaritan statute still covers the emergency medical personnel.
SENATOR JACOBSEN MOVED TO CONCUR WITH ASSEMBLY AMENDMENT No. 752 TO S.B. 155.
SENATOR MCGINNESS SECONDED THE MOTION.
THE MOTION CARRIED. (SENATORS ADLER, SMITH, AND TITUS WERE ABSENT FOR THE VOTE.)
* * * * *
Senator James confirmed there was no further business to come before the committee, and adjourned the meeting at 7:26 p.m.
RESPECTFULLY SUBMITTED:
Sherry Nesbitt,
Committee Secretary
APPROVED BY:
Senator Mark A. James, Chairman
DATE:
??
Senate Committee on Judiciary
June 18, 1993
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