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May 9, 2023
ITEM TITLE
Mobilehome Rent Control: Reduce the Administrative Fee for Mobilehome Rent Control Services to $10 for Fiscal Year 2023/24
Report Number: 23-0118
Location: No specific geographic location
Department: Housing and Homeless Services
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act (“CEQA”) State Guidelines; therefore, pursuant to St ate Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution amending Chapter 18 (Mobilehomes) of the City's Master Fee Schedule and reducing the administrative fee to $10 for fiscal year 2023/24.
SUMMARY
Effective August 18, 2011, the City of Chula Vista, under Chula Vista Municipal Code (“CVMC”) Section
9.50.030, established an Administrative Fee to be assessed upon all eligible mobilehome residents receiving benefits and services under CVMC Chapt er 9.50 (“Chapter 9.50” or the “Ordinance”) – Mobilehome Park Space Rent Review. Chapter 9.50 requires that the Administrative Fee be established annually by the action of the City Council. Due to existing fund balance and the lack of rent review cases over the past ten (10) years, staff recommends reducing the fee to $10 for fiscal year 2023-24 (“FY 24”).
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with CEQA and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is required.
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BOARD/COMMISSION/COMMITTEE RECOMMENDATION
The Housing and Homeless Advisory Commission voted 6-0 at their April 27, 2023, meeting to recommend approval of the Administrative Fee at the current rate of $12 for FY 24. However, after further review, staff recommends reducing the fee to $10, as further described below.
DISCUSSION
Chapter 9.50 offers unique benefits and services solely to eligible mobilehome residents. As part of the annual Administrative Fee update process, staff is reporting out on prior year revenues and expenditures to establish the amount necessary to recover the costs of administering Chapter 9.50. This report provides an update on revenues and expenditures for July 1, 20 22 - June 30, 2023, and the fee recommendation for FY
24. Fiscal Year 2022-23 (“FY 23”) Projected Revenues and Expenditures Revenues for FY 23 were anticipated to total $26,400 based on 2,200 residents paying a fee of $12. Actual payments were received from 2,332 eligible spaces, with some residents overpaying. After all attempts were made to return overpayments, efforts resulted in total collected revenues of $27,986. A summary of revenues and projected expenditures is provided in Table 1, followed by a description of related activities.
Table 1: FY 23 BUDGET SUMMARY
Budgeted Projected
Revenues:
Fund Balance as of 7/1/22 $ 248,900
Fee Revenues $ 26,400 $ 27,986
Investment Earnings $ 0
TOTAL FUNDS $276,886
Expenditures:
Staff Charges $ 32,000 $ 32,000
Experts $ 25,000 $ 0
Administrative/Billing Costs $ 4,000 $ 4,000
TOTAL EXPENDITURES $ 36,000
Projected Surplus/Deficit $240,886
Staff Charges
Administration of Chapter 9.50 is projected to result in staff charges of $32,000 for FY 23. Staff provided the following services:
Ombudsman Activities (Office Visits & Mobilehome Information Line) – Staff responded bilingually to all inquiries related to Chapter 9.50.
Resident Invoicing Preparation – A June 1 st billing and/or ineligible notice was sent to all mobilehome/trailer residents. In August, reminder notices were sent to all residents with a balance due and to those residents determined ineligible.
Fee Collection – Collection and processing of fee payments received , including additional administrative expenses for online payment portal maintenance issues. Database Maintenance – Maintained the database with current resident information.
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Mobilehome Rent Review Commission (“MHRRC”) Educational Meetings - Provided general ombudsman related activities to residents.
Annual Permissive Rent Calculations - Twice a year, the Consumer Price Ind ex (CPI) is released .
Notification was sent to all park owners and managers of the annual permissive rate as calculated under CVMC Section 9.50.050.
Rent Review Inquiries/Hearing Administration – Staff coordinated inquiries regarding rental increases between residents and park management as needed.
Experts
No rent review hearings or hiring of experts was necessary during FY 23. Funds collected will be available to appropriate in FY 24 for hiring of experts if a rent review case is required. The lack of hearings also resulted in staff time reimbursement savings to the program.
Administrative Costs (Postage, Office Supplies and Printing) In FY 23, the billing of the administrative fee wa s contracted out for the sixth year. Additional annual administrative costs, including CPI notices and publication of this hearing notice were incurred.
FY 24 Budget and Administrative Fee
Staff recommends the Administrative Fee be reduced to $10 for FY 24, due to the current fund balance and lack of rent review hearing activity. Important factors taken into consideration include:
Since the ordinance amendments in 2012, no rent review cases have been heard for existing residents.
However, two rent review c ases began the process (Rancho Bonita in fiscal year 2014 -15 and El Mirador in fiscal year 2017-18). In both cases, the rent increases were agreed upon between resident and owner prior to hearing. Prior to the 2012 amendments, existing resident rent revie w cases occurred approximately every other year. Therefore, staff has forecasted expenditures with one case every three years. This is a change from prior forecasting of every other year. Staff costs to administer the fee and rent review services have remained stable. Since the fee has been reduced to $30 or less, more residents have been consistently paying.
Therefore, it is projected that 2,300 residents will pay this coming year.
Table 2 provides a summary of the FY 2 4 budget which anticipates one rent review case and a contingency of $25,000 for expert time related to one additional case, if needed, with an estimated ending fund balance of $153,886.
Table 2: FY 24 BUDGET SUMMARY
Budget
Revenues: Projected Fund Balance as of 7/1/23 $ 240,886 Anticipated Fee Revenues (2,300 @ $10) $ 23,000
Expenditures: Staff Charges $ 55,000
Experts $ 25,000
Administrative/Billing Costs $ 5,000
TOTAL ANTICIPATED EXPENDITURES $ 85,000
Contingency for Expert $25,000
Anticipated Fund Balance as of 6/30/24 $ 153,886
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With the fee of $10, annual revenues alone will not cover costs if heavy administrative costs are expended in any given year. Therefore, fund balance would then be used to maintain administrative services. If cases were to occur every third year, program funds would rapidly be depleted. For this reason, staff does not recommend any lowering of the fee rate going forward. Account projections based on differing fee amounts and assuming cases every third year are detailed in Table 3 below.
Table 3: FUND BALANCE PROJECTIONS
Given current workload and few actual cases, staff has projected being able to maintain the fee for several years at $10 and will make further considerations to changes in the fee if any cases are heard in the next few years.
DECISION-MAKER CONFLICT
Staff has determined that the action contemplated by this item is ministerial, secretarial, manual, or clerical in nature and, as such, does not require the City Council members to make or participate in making a governmental decision, pursuant to California Code of Regulations Title 2, section 1870 4(d)(1).
Consequently, this item does not present a conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no current year fiscal impact to the General Fund as a result of this action.
ONGOING FISCAL IMPACT
There are no ongoing fiscal impacts to the General Fund as a result of this action. Staff time and costs associated with the administration of Chapter 9.50 are anticipated in the collected fee and will be adopted as part of the fiscal year 2023-24 budget. Staff annually analyzes the fee level to establish the amount necessary to recover costs of administering Chapter 9.50. Future fee rates will be recommended based on amounts that maintain program funds in successive years.
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
FY23 FY24 FY25 FY26 FY27 FY28
$10
$12
$15
$20
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ATTACHMENTS
1. Proposed amendments to Chapter 18 of the Master Fee Schedule Staff Contact: Dania Gonzalez, Principal Management Analyst Mark Barnard, Management Analyst II