ANTHONY C. RODRIGUEZ
ATTORNEY AT LAW
1425 LEIMERT BOULEVARD
SUITE 101
OAKLAND, CALIFORNIA 94602-1808
TELEPHONE (510) 336-1536
FACSIMILE (510) 336-1537
September 25, 2025
VIA EMAIL ONLY
The Mayor and City Council
City of Fortuna
621 114 Street
Fortuna, California 95540
Re: Proposed Moratorium on Mobilehome Park Rent Increases / September 29, 2025 City Council Meeting / Agenda Item C Dear Mayor and City Council Members:
As you know, this office represents the owners of Royal Crest Mobile Estates. I am writing to object to the moratorium on the City Council's Agenda for its September 29, 2025 meeting, because such a moratorium is not only unnecessary, it has the potential to result in costly and unwanted litigation for all concerned. I am also writing to confirm that my client's legally noticed January 1, 2026 rent increase is based on the 2.49% increase in the Consumer Price Index for the area that includes San Francisco, because that is the Consumer Price Index the City asked the parkowner to use at our August 28, 2025 meeting regarding future rent increases at the park. Finally, I am also writing to correct the record with respect to some of the false statements made by some of the speakers at the September 15, 2025 City Council meeting regarding Royal Crest Mobile Estates.
1. Pursuant to the City's Request, the Parkowner has Limited its Annual Rent Increase to the 2.49% Increase in the Inflation Rate for the Area that Includes San Francisco: In Birkenfeld v. City of Berkeley (1976) 17 Cal. 3d 129, 166-167 and 172-173, the California Supreme Court found that when adopting rent control ordinances, local governments can roll back "last minute" rent increases, made in anticipation of rent control.
Under that decision, a landlord can be prevented from implementing extraordinary rent increases that exceed "the rent that would be paid in an open market," in an attempt to circumvent legitimate efforts to regulate rents.
The Mayor and City Council
September 25, 2025
In this case, there was neither an extraordinary rent increase, nor a last minute attempt to circumvent rent control. To the contrary, both the City and the tenants knew well in advance of the proposed moratorium that the anniversary date for rent increases at Royal Crest Mobile Estates is January 1, 2026. Moreover, the 2.49% rent increase is anything but extraordinary. To the contrary, although the inflation rate for the United States as a whole was 2.9% during the preceding twelve months, the City specifically requested the parkowner to base its January 1, 2026 rent increase on the inflation rate for San Francisco, which although normally higher than the nationwide rate, was only 2.49% during the relevant period.
It must also be stressed that the parkowner has built its own "moratorium" into its January 1, 2026 rent increase notice. More specifically, that notice states that if the City, the parkowner and/or the tenants are still negotiating with respect to future rent increases on January 1, 2026, the parkowner will provide each space at the park with a "credit" for the full amount of the January 1, 2026 rent increase. That notice also states that if negotiations continue into February or March, the parkowner will provide rent credits for those months as well. A copy of that rent increase notice is attached hereto as Exhibit A.
2. The Parkowner Will Not Increase Rents Again Until January 1, 2027. As stated above, a moratorium may not only lead to unwanted litigation for the parkowner, the City and the tenants at Royal Crest, it would needlessly involve the other three mobilehome parks within the City limits. In order to avoid both of those results, the parkowner hereby repeats its previous promise that it will not implement another rent increase with respect to the current residents at Royal Crest until at least January 1, 2027.
3. The Park is Owned by a Limited Partnership, Consisting of 38 Limited Partners: At the September 15, 2025 City Council meeting, some tenants claimed the park is owned by Storz Management Corporation, which they also claimed was a multibillion dollar corporation. Other tenants claimed the park is owned by Heritage Funding Corporation, which they alleged is a subsidiary of Storz Management Corporation, resulting in some type of ownership shell game.
The true fact is that the park has been owned since 1977 by Royal Crest Investors, which is a California limited partnership, containing 46 ownership shares. Those 46 shares are owned by 38 partners. The two largest shareholders own four shares each, or roughly
8.6% of the park. Twenty-five of the 38 limited partners own one share or less, while the remaining partners own two shares.
The Mayor and City Council
September 25, 2025
It is true that Heritage Funding Corporation and Heritage Funding IV are the general partners for the limited partnership, and under California law therefore are responsible for managing the park. However, the general partners own zero percent (0%) of the park. A copy of the July 29, 1977 deed for the park is attached as Exhibit B. A list of the limited partners, and their ownership shares, is attached as Exhibit C. In order to protect the privacy of the limited partners, their last names have been deleted and replaced by "XXXXX"
4. The Parkowner's Rental Assistance Program Has Been in Place for Many Years: At the September 15, 2025 City Council Meeting, some tenants claimed that the parkowner's rental assistance program did not exist until September of 2025. Again, that claim is false. Although the parkowner is still attempting to obtain documentation from MHET showing the exact date that program was first offered, attached hereto is a letter dated November 5, 2019, advising a resident at the park that their application for a 10% rent credit had been approved for another year. Again, in order to protect the privacy of that resident, their name and address have been redacted from that November 5, 2019 letter. (See Exhibit D).
5. The Proposed Moratorium and/or the Proposed Rent Control Ordinance Would Result in the Cancellation of the Rental Assistance Program: As demonstrated by the terms and conditions in the MHET rental assistance program that was submitted with my August 25, 2025 letter to the City Manager, that program does not apply to any space that is "regulated by rent control." Because the adoption of the proposed moratorium would end the rental assistance program, the City Council is urged to reject the proposed moratorium at this time. Again, this is especially true since (i) the January 1, 2026 rent increase was limited to the 2.49% increase in the CPI requested by the City, and (ii) the parkowner has built its own moratorium into that rent increase, in the event a long term plan has not been agreed to prior to April 1, 2026.
6. Any Agreement Regarding Rents Must be Enforceable: At the September 15, 2025 City Council meeting, some speakers claimed that any agreement entered into would be voluntary, so the parkowner could violate it at any time, without consequence. Again, that claim is false. Although the exact details regarding allowable rent increases must still be negotiated, any agreement that is entered into must have consequences in the event the parkowner violates that agreement, and those consequences must be enforceable.
That being said, these types of agreements are usually fairly straightforward in terms of calculating allowable rent increases. Accordingly, although the agreement must be enforceable if violated, the parkowner is confident no such violations will occur, as the The Mayor and City Council
September 25, 2025
calculation of a rent increase pursuant to a Memorandum of Understanding is essentially the same as the calculation of a rent increase under a rent control ordinance.
Again, the main difference between a Memorandum of Understanding and a rent control ordinance is that under a Memorandum of Understanding the parkowner waives its right to apply for "fair return" increases, which by definition require litigation, no matter how carefully the ordinance is drafted. Because avoiding litigation involving fair rates of return benefits all parties, including the taxpayers, my clients again respectfully request the City Council to continue to explore that path, with the expectation of a mutually agreeable long term plan being in place before April 1, 2026.
7. The Parkowner's Expenses Have Increased by 89% Since 2013, Not Including an Additional $892,201 for Capital Improvements During that Same Period: Prior to the September 15, 2025 City Council Meeting, the City asked the parkowner to provide copies of all rent increase notices since 2019, which the parkowner complied with. Based on that request, the parkowner also submitted information showing its expenses had increased by 52.28% between 2019 and 2025, meaning its rent increases had not kept with its increased expenses.
Rather than limiting the discussion to the period 2019 through 2025, the City's Staff Report included rent increases dating back to 2013, which I am assuming it obtained from one or more residents. As a result, the parkowner did not have an opportunity to respond with respect to that new, expanded twelve year period. The parkowner will respond to that additional information below.
Between January 1, 2013 and January 1, 2025, the Consumer Price Index increased by 37%, from 230.280 to 315.605. However, during that same period, total expenses at the park increased by 89%, from $713,419.58 to $1,348,116.94, which is far more than twice the increase in the inflation rate during that twelve-year period. Both the dollar and the percentage amounts of those cost increases are summarized as follows:
Item 2013 2024 Increase
Total Expenses $713,419.58 $1,348,116.94 89%
During that same twelve-year period, the parkowner incurred an additional $892,021 for various capital improvement projects at Royal Crest. Under the Ninth Circuit Court of Appeal's decision in Sierra Lake Reserve v. City of Rocklin (9t' Cir. 1991) 938 F. 2d 951, 958, the parkowner is not only entitled to recover "every dollar" spent on those projects, the The Mayor and City Council
September 25, 2025
parkowner is entitled to a fair return on those expenditures, as "breaking even" is not enough to satisfy due process.
Using a conservative 8% rate of return, in order to amortize $892,021 in capital expenditures over a ten-year period, the parkowner would require additional income of $10,823 per month, resulting in an additional rent increase of $52.80 per space per month. ($10,823 per month ÷ 205 spaces = $52.80 per space per month. (See Exhibit E). In short, even if the City looks back twelve years, the evidence is clear that the rent increases at Royal Crest have not been sufficient to keep pace with the parkowner's expenses, plus its capital improvement expenditures.
8. The Parkowner Has Not Alleged Rent Control is Illegal, But that Rent Control Can Result in Costly and Unwanted Litigation: The Agenda for the City Council's September 24, 2025 Meeting indicated the Council would meet in closed session to discuss the parkowner's claim that rent control is illegal. However, the parkowner has never claimed that rent control is illegal.
What the parkowner has claimed is that under state and federal law, a rent control ordinance must allow a parkowner to pursue various claims, including but not limited to (1) whether it is receiving a fair return on investment, (2) whether rents at the time rent control is enacted reflect general market conditions (a "Vega" adjustment), and (3) whether a failure in either regard requires the tenants and/or the City to pay retroactive rents (a "Kavanau" adjustment).
Based on my more than forty years of representing parkowners in rent control proceedings in both northern and southern California, I can assure the Council that those are the issues that can result in litigation lasting many years, resulting in unwanted stress and expense for all concerned. Again, to be clear, if the parties are able to agree on a long term plan regarding rent increases at Royal Crest, my clients are willing to waive their right to pursue litigation regarding each of those issues. The City Council, not the parkowner or the tenants, must decide whether such a plan is in the public interest.
Very truly yours,
Anthony C. Rodriguez
CC: Client
EXHIBIT A
ROYAL
CREST
Royal Crest Mobile Estates
2283 Crest Drive
Fortuna, CA 95540
(707) 617-2585
September 24, 2025
VIA UNITED STATES MAIL
Fortuna, CA 95540
Re: Ninety (90) Day Notice of Rent Increase
Civil Code Section 798.30
Dear Homeowner/Resident:
PLEASE TAKE NOTICE that effective January 1, 2026, the rent for your space will be increased by $19.34 per month, from $777 to $796.34, based on the 2.49% increase in the Consumer Price Index. Below is a more detailed explanation of the above noticed rent increase.
Between January 1, 2019 and January 1, 2025, the Consumer Price Index for the United States increased by 25.45%, from 251.712 to 315.605. During that same period, annual expenses for the park increased by 52.28%, from $885,308.85 to $1,348,116.94, or more than twice the increase in the Consumer Price Index. During that same period, the parkowner incurred an additional $682,333 for various capital improvement projects at the park, which are not included in its operating expenses, including new streets and fences, and upgrades to the water system.
On August 28, 2025, management met with representatives from the City of Fortuna to discuss a number of subjects involving the park, including inflation, expenses, capital improvements and rents. During that meeting, the City asked management to limit the parkowner's January 1, 2026 annual rent adjustment to the increase in the inflation rate. At that same time, the City asked management to base the parkowner's January 1, 2026 rent increase on the Consumer Price Index for the area that includes San Francisco, which over the past twenty years has been greater than inflation in the United States as a whole, but during the past twelve months was lower than the national rate. On September 11, 2025, the parkowner advised the City that as a sign of good faith, it had agreed to that request.
During the twelve-month period ending August 31, 2025, the Consumer Price Index for the United States as a whole increased by 2.9%, from 314.796 to 323.976. By contrast, during that same period, the Consumer Price Index for the area that includes San Franciso increased by only 2.49%, from 349.290 to 357.992. Again, because the parkowner has agreed to use that lower rate, your annual rent increase is limited to 2.49%, with no additional increase based on the above-described increase in operating expenses and capital improvement expenditures.
As you may know, the parkowner has also advised the City that it is willing to commit to a long term plan, that will tie future annual adjustments to the Consumer Price Index and/or the pass-through of capital improvements that are needed to replace infrastructure that either wears out, or is destroyed by fire, earthquake, or other acts that are beyond the parkowner's reasonable control. The parkowner assumes that any such plan is likely to be finalized before January 1, 2026. However, as a further sign of good faith, in the event such a plan is not in place by January 1, 2026, the parkowner will provide each and every space at the park with a credit for the above-described 2.49% rent increase, until such a plan is in place, or until April 1, 2026, whichever comes first.
Finally, management wants to remind you that the parkowner has for many years had a "rental assistance program" in place, which can provide a rent credit of up to 10% per month for qualifying residents, or essentially four times the amount of the above described 2.49% rent increase. If you believe you qualify for the parkowner's rental assistance program, you are again encouraged to apply.
Pursuant to Civil Code Section 798.30, this letter constitutes your ninety (90) day notice of the above-described rent increase. Thank you for your continued residency at Royal Crest Mobile Estates.
Storz Management Company,
Authorized Agent for the Parkowner
EXHIBIT B
RED SEP 1G 1971 16587
RECORDED AT REQVEST WE
RECORDING REQUESTED BY Western Title Insurance Co.
WESTERN TITLE INSURANCE COMPANY VOL1430REDOROS PC 2,40
AND WHEN RECORDED MAIL TO JuL 29 | 59 PM 1977
SAME Royal Crest Investors
6920 Fair Oaks Blvd. #200
RESS GRACE JACKSON/RECORDEL
Carmichael, Ca. 95608 Salal Dooke DEPUTT
HE L J FEES S 0
2)
tle Order No. Escrow No. 1495g
SPACE ABOVE THIS LINE FOR RECORDER'S USE
MAIL TAX STATEMENTS TO
7 Documentary transfer tax $ None....
Computed on full value of property conveyed, or
NAME
• Computed on full value less liens and encumbrances
RESS same as above remaining thereon at time of sale.
Auchen Western Title insurance Western Title Insurance Co.
HAEL
Signature eclarant or agent determining tax — firm name Indinidual Grant Deed
WESTERN TITLE FORM NO. 104
FOR VALUE RECEIVED, GERALD L. STORZ
GRANT__ to ROYAL CREST INVESTORS, a limited partnership all that real property situate in the City of Fortuna
County of Humboldt , State of California, described as follows:
SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF
AP No. 201-271-02
and
AP No. 201-271-05
Dated. July 29th 1977
elish thing
STATE OF CALIFORNIA
County of - Humbo ld t
OnJuly 29th _ 197Z, before me, the undersigned,
FOR NOTARY SEAL OR STAMP
a Notary Public, in and for said State, personally appeared Gerald L. Storz
is
known to me to be the person—_. whose name
subscribed to the within instrument, and acknowledged to me that _he executed the same. 1. SUCHANEK
NOTARY FUBLIC
HUMBOLDY COUNTY, CALIFORNIA
EXHIBIT C
Royal Crest Investors
Units
Legal Investor Name Owned
Heritage Funding Corporation (General Partner) 0.00000
Heritage Funding IV (General Partner) 0.00000
Norma XXXXX Living Trust 0.08334
Mark Alan XXXXX 0.08333
Ryan James XXXXX 0.08333
XXXXX Grandchildren's Trust FBO Morgan XXXXX 0.16666
XXXXX Grandchildren's Trust FBO Makenzie XXXXX 0.16667
XXXXX Grandchildren's Trust FBO Mason XXXXX 0.16667
XXXXX Grandchildren's Trust FBO Joseph XXXXX 0.25000
XXXXX Grandchildren's Trust FBO Martin XXXXX 0.25000
XXXXX Children's Trust FBO C. Michelle XXXXX 0.50000
XXXXX Children's Trust FBO Monica XXXXX 0.50000
Mark XXXXX 0.66700
Scott XXXXX 0.66700
Rex XXXXX 0.66600
The William XXXXX and Diane XXXXX Living Trust 0.87500
Julee XXXXX 0.87500
Cynthia XXXXX 1.00000
Janet XXXXX 1.00000
Katherine XXXXX Life Trust
Larry XXXXX
XXXXX Trust Dated November XX, 1994
Susan XXXXX Trust
Thomas XXXXX Life Trust
Leanne XXXXX Trust, dated December XX, 2013
Virginia XXXXX
The Estate of Joel XXXXX
XXXXX Family Investments
Edison and Nancy XXXXX Family Trust
XXXXX Family Revocable Trust
James XXXXX and Ruth XXXXX Family Trust
Kevin and Gail XXXXX Revocable Trust
Ricky & Lynne XXXXX Revocable Family Trust
XXXXX Family 1997 Revocable Trust
Robert XXXXX Family Revocable Trust
XXXXX Revocable Trust
The XXXXX Family Trust
Patricia XXXXX Revocable Trust
Laura XXXXX
S& XXXXX Enterprises
46.0000
1 of 2
EXHIBIT D
Mobile Home
Assistance Program
November 5, 2019
Fortuna, CA 95540
Dear
I have reviewed your application for continued assistance from the MHET Mobile Home Rental Assistance Program. I am happy to inform you that your application has been approved.
Effective with the December 1, 2019 rent, you will note a continued subsidy/rent credit equal to 10% of your base space rent being deducted from your monthly rent bill. This subsidy will be effective until November 30, 2020, after which time you may re-apply if you have the need to do so.
I have included two copies of your Rental Assistance Agreement. Read it carefully, sign both copies and return one to me in the envelope provided. Keep the second copy for your records. By signing this contract/agreement, you are agreeing to notify this office of any change in your situation.
This program is sponsored and funded by the park owners and is intended to provide financial assistance until such time as you can find more permanent solutions to your financial difficulties. There is no repayment requirement.
I am glad that we were able to assist you.
Sincerely,
Kayla T.
Rental Assistance Administrator
cc: Park Owner 25241 Paseo de Alicia
Suite 120
Laguna Hills, CA 92653
Phone: 949-380-3311
Fax: 949-380-3310
Sponsored by Manufactured Housing Educational Trust
EXHIBIT E
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