ANTHONY C. RODRIGUEZ
ATTORNEY AT LAW
1425 LEIMERT BOULEVARD
SUITE 101
OAKLAND, CALIFORNIA 94602-1808
TELEPHONE (510) 336-1536
FACSIMILE (510) 336-1537
January 26, 2026
The Mayor and City Council
City of Fortuna
621 11* Street
Fortuna, California 95540
Re: Proposed Mobilehome Rent Control Ordinance
Dear Mayor and City Council Members:
For almost fifty years the owners of Royal Crest Mobile Estates have provided a well maintained, safe and affordable place for seniors to live in the City of Fortuna. During that same period, management has assisted many who were struggling financially, or who were late on their rent, so as to avoid eviction whenever possible.
Royal Crest is disappointed the City Council has decided not to attempt to negotiate a mutually acceptable solution to the issue of rent increases at the park. However, despite that disappointment, Royal Crest respectfully requests the City Council to either reconsider its decision, or in the alternative, to include some of the same rent increase provisions in the proposed rent control ordinance that could have been included in an MOU, thereby reducing the likelihood of litigation regarding one or more of the four mobilehome parks within the city limits.
As the City Council knows, prior to its decision to void the January 1, 2026 rent increase at the park, Royal Crest set forth a number of proposals that would benefit both the City and the residents for at least the next ten years, while at the same time allowing the park to cover its expenses, make necessary capital improvements, and hopefully provide the limited partners with a fair profit. Those proposals included, but were not limited to (1) waiving its right to sue the City if it did not obtain a fair return on its investment, (2) allowing up to five percent of qualifying low income residents to avoid paying any rent increases at all during that ten year period, and (3) not closing the park, unless required to do so by a fire, earthquake, flood, or other unanticipated disaster.
Although those negotiations have stalled, Royal Crest believes that enacting a rent The Mayor and City Council
January 26, 2026
control ordinance that is fair to both sides would be advantageous to all parties. From Royal Crest's perspective, a fair rent control ordinance would include each of the provisions described in the next section of this letter.
Part I: A Fair Rent Control Ordinance
A. Full CPI Adjustments: As set forth in my September 25, 2025 letter, since 2013 Pura Cres sace priest a vine else la lat expenses have reincase by more 379. twice the increase in inflation over the past twelve years, the annual rent increase must equal or exceed the increase in the CPI. As has happened in many jurisdictions throughout California, costly and time consuming "fair return" litigation can follow if the annual CPI increase is less than 100% of the increase in the CPI.
In order to help avoid litigation over that issue, Royal Crest submits that any request by the tenants to limit the annual rent increase to less than 100% of the increase in the CPI should be rejected by the City. It must also be stressed that increases based on 100% of the increase in the CPI cannot fairly be characterized as unreasonable with respect to those residents who receive Social Security, because Social Security Cost of Living Adjustments are also based on 100% of the increase in the inflation rate, while again, the cost of operating mobilehome parks has increased significantly more than 100% of the increase in the inflation rate.
B. Pre-Approval of Capital Replacement Projects: The park was developed in two phases. Although the exact date is unknown at this time, it is believed the first phase was constructed by the original owners in the early 1950s, meaning that infrastructure is now more than 70 years old. The second phase was constructed shortly after the current owners purchased the park, and is therefore almost 50 years old.
Infrastructure does not last forever. At some point it will need to be replaced. Under the draft ordinance, it would appear that parkowners are expected to make such improvements, and then hope the City's hearing officer will allow them to recover the cost of those expenditures, after their money is spent.
Not every parkowner is willing to take such risks, as is evidenced by the more than 700 mobilehome parks that have closed throughout California since the advent of mobilehome rent control in the late 1970s. Of course, it is that same risk that has resulted in almost no new mobilehome parks being built in this state during that same time frame.
In order to enable parkowners to replace aging infrastructure without fear of not being The Mayor and City Council
January 26, 2026
compensated for those expenditures, Royal Crest believes the proposed ordinance must contain a procedure that allows parkowners to obtain pre-approval of capital improvement rent increases, before their money is spent.
In this light, I must advise that this office was lead counsel for the parkowner in Sierra Lake Reserve v. City of Rocklin, (9'h Cir. 1991) 938 F. 2d. 951, 958, which established the constitutional right of parkowners to recover the full cost of capital improvement expenditures, plus a fair return on those expenditures. Should the City fail to allow parkowners to recover the cost of their capital improvement expenditures, plus a fair return on those expenditures, there is little doubt parkowners will either (I) not make those improvements, (II) close their parks, and/or (III) sue the City in Federal District Court, based on the violation of their constitutional rights. For your convenience, a copy of the Sierra Lake Reserve case is attached as Exhibit 1 to this letter, with the section regarding capital improvement pass throughs highlighted at page 5 of Exhibit 1.
In that same light, you should also be advised that as part of a settlement with the City of Fremont in the 1990s, this office and Special Counsel for the City of Fremont negotiated a provision in the Fremont rent control ordinance that allowed for pre-approval of capital improvement expenditures, which in most instances are passed through to the residents over ten to twenty years. The Fremont City Council's adoption of that provision not only led to a reduction of rent control litigation in Fremont, it was later adopted by Contra Costa County, virtually word for word. A copy of that provision from the City of Fremont's mobilehome rent control ordinance is attached as Exhibit 2 to this letter.
C. Rent Increases Following the Sale of Mobilehome: Each time a city restricts the amount parkowners can increase rents, that city increases the likelihood of litigation regarding the parkowners' right to a fair return on investment. Again, according to the draft ordinance, it would appear that rent increases following the sale of mobilehomes are not allowed. That approach is flawed for several reasons, including (I) it primarily benefits tenants who are leaving Fortuna, (II) it increases the cost of buying mobilehomes for tenants who want to live in Fortuna, and (III) it punishes the very parkowners the city has stated in its "Housing Element" report that it wants to protect.
In its September 2025 Staff Report, the City also claimed, without evidence, that a $10 increase in rent will result in a $1,000 loss in the value of a mobilehome. However, even if that claim was accurate, the opposite would also be true, meaning each $10 rent increase on turnover that is denied results in a $1,000 increase in the cost of a mobilehome. Of course, the beneficiary of that $1,000 increase in cost is not the new tenant who will be moving into The Mayor and City Council
January 26, 2026
the park, but the old tenant, who is not only moving out of the park, but in most instances, will no longer be residing in Fortuna.
By prohibiting rent increases when tenants sell their mobilehomes, the City is not only providing the tenant who is moving out of the park with a significant windfall, the City is making it more difficult for parkowners to obtain a fair return on their investment. By contrast, if the City allows parkowners to increase the rent when a home is sold, the new tenant will pay less for the mobilehome, while the parkowner will be more likely to obtain a fair return.
As you may know, under California law, parkowners have the right to determine whether prospective tenants can afford the rent and other charges of the park. See Civil Code Section 798.74. Therefore, even though the new rent may be higher than what the old tenant was paying, the parkowner and the City can be reasonably certain the new tenant will be able to pay that higher rent. In order to provide all four parkowners in Fortuna with a better chance of earning a fair return, Royal Crest proposes that any ordinance that is adopted allow rent increases of at least ten percent (10%) following a change in tenancy at the park.
D. "Fair Return" and Vega Adjustments: If the City Council adopts a rent control ordinance with the above provisions, Royal Crest hopes those increases will be sufficient to provide each of the four mobilehome parks in Fortuna with the constitutionally required "fair return." However, there is no guarantee that will happen. Accordingly, any ordinance adopted by the City Council must contain a "safety valve," that enables parkowners to apply for a fair return, should the above described rent increases prevent them from doing so.
Fisher v. City of Berkeley (1984) 37 Cal. 3d 644, 692.
Similarly, any ordinance the City Council adopts must also provide a procedure whereby parkowners who were charging below market rents at the time rent control was adopted can apply for a Vega adjustment, so as to increase their rents to reflect "general market conditions." See Vega v. City of West Hollywood (1990) 223 Cal. App. 3d 1342, 1351; See also Concord Communities, L. P. v. City of Concord (2001) 91 Cal. App. 4" 1407, 1419.
Royal Crest expects that any ordinance the City adopts will honor the constitutional rights of all four parkowners with respect to each of those issues. If it does not, costly, time consuming and unwanted litigation is almost certain to follow for all concerned, including the City and the residents at one or more of those parks, who may become "real parties in interest" in such litigation. See Code of Civil Procedure Section 1094.5.
The Mayor and City Council
January 26, 2026
E. Reservation of Rights: As will be explained in Part III of this letter, the owners of Royal Crest Mobile Estates are willing to waive their rights to "Fair Return" and Vega adjustments, as well as their right to close the park, for up to ten years, in exchange for an MOU, or an ordinance with the above described provisions, that provides certainty and eliminates the need for costly and time consuming litigation. So the record is clear, by making the above described proposals with respect to the proposed ordinance, Royal Crest is not waiving any of its rights at this time. Again, as explained in Part III of this letter, any such waiver must be reduced to writing and signed by the City and Royal Crest, to make certain there is a meeting of the minds with respect to the rights being waived.
Part Il. Affordability and Mobilehome Sales
At previous City Council meetings, a small group of residents claimed that the current rents are unaffordable, and that those rents make it impossible to sell their mobilehomes.
However, the facts do not support those claims.
First and foremost, Royal Crest cannot recall a single resident being evicted for non- payment during the past five years. Moreover, it is exceedingly rare for a tenant not to pay their rent because they cannot afford their annual rent increase. Rather, in the overwhelming majority of cases, the rent and/or utilities are not paid because the resident is sick or has died, has been laid off or fired, has substance abuse issues, or has had a spouse, partner or roommate lose their job, get sick, die, or move out.
Second, over the past fifty years management has on many occasions worked with residents who are unable to pay their rent due to reasons that are beyond their control, so as to enable them to avoid eviction, and the loss of their homes. In some cases, this will involve the acceptance of the amount owing weeks or even months after their notice to pay or quit has expired. In other cases, the parkowner and the tenant will agree to a payment plan, whereby the outstanding balance can be paid off over time.
Third, for many years Royal Crest has provided a "rental assistance" program, that enables qualifying residents to receive a credit of up to 10% on their monthly rental obligation. As the City Council may recall, on September 10, 2025, Royal Crest provided a memo to each space at the park, advising that the maximum income requirements for that program had been increased to $32,900 for a one person household, and to $37,600 for a two person household. However, not a single resident at the park has applied for that program since those maximum income requirements were increased.
The Mayor and City Council
January 26, 2026
As the City Council may recall, a number of tenants criticized Royal Crest's "rental assistance" program, claiming they do not qualify for it. However, if a resident does not qualify because their income is too high, that would mean that if their rent is $822 per month and they are in a one person household, they are spending less than 30% of their income on rent ($822 x 12 months = $9,864 ÷ 32,900 = 29.98%), which is below the 30% affordability threshold in the City's own "Housing Element." If they are in a two person household, they are spending less than 27% of their income on rent ($822 x 12 months = $9,864 ÷ 37,600 =
26.23%), which is even further below the City's 30% affordability threshold. In other words, the current rents for such tenants are "affordable" under the City's own guidelines.
Fourth, with respect to the ability of the residents to sell their homes, a January 13, 2026 report from Santiago Financial Inc., which is based on public records from the California Department of Housing ("HCD"), shows that 37 mobilehomes have been sold at Royal Crest Mobile Estates in the past two years. That report also shows that the average price of those 37 mobilehome sales was $85,445.08, or more than $52,000 above the average original sales price of those 37 mobilehomes, which was only $32,160.57. A copy of that January 13, 2026 report is attached as Exhibit 3 to this letter.
Unfortunately, some of the residents who spoke before the City Council have ignored all or most of the above facts, and have instead threatened the City Council with the loss of their votes, if it does not adopt an ordinance that allows them to sell their mobilehomes at inflated values when they move out of the park. Given Royal Crest's willingness to help so many residents over the past fifty years, Royal Crest is at a loss as to how easily those speakers have disregarded that history.
Nevertheless, Royal Crest remains willing to negotiate with the City in order to reach a mutually beneficial agreement regarding rents at the park, which would obviate the need to impose a rent control ordinance on each of the other mobilehome parks in the city limits, not to mention the possibility of litigation between the City and those other parkowners.
Should the City Council determine it must regulate the rents at each and every mobilehome space in Fortuna, Royal Crest is also willing to enter into an agreement waiving some of its rights, provided any ordinance that is adopted incorporates the provisions discussed in Part I of this letter. The terms of that proposal are set forth in more detail in the next section of this letter.
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The Mayor and City Council
January 26, 2026
Part III. Waiver of Rights in Exchange for a Fair Ordinance As stated above, Royal Crest is willing to waive a number of its rights, if an MOU can be negotiated regarding future rent increases at the park. Of course, if such an MOU can be negotiated, there would be no need to impose rent restrictions on the other parkowners within the city limits, at least at this time.
Should the City Council determine a rent control ordinance must be adopted, Royal Crest remains willing to waive several important rights, if that rent control ordinance contains the provisions described in Part I of this letter. More specifically, if the proposed ordinance allows (1) annual rent increases based on 100% of the CPI, (2) ten percent rent increases following a change in tenancy, and (3) pre-approval of rent increases for capital improvement expenditures, Royal Crest is willing to take the risk that those three provisions will enable it to make a fair return. Accordingly, if the ordinance contains those three provisions, Royal Crest is willing to enter into an agreement whereby it does each of the following during the term of that agreement:
1. Waive the right to apply for a "fair return" under the City's ordinance;
2. Waive the right to apply for a "Vega" adjustment under the City's ordinance;
3. Waive the right to challenge the constitutionality of the ordinance, or the previously adopted moratorium, which voided the January 1, 2026 CPI adjustment at the park;
4. Waive the right to close the park, unless necessary to do so because of an unanticipated disaster, such as an earthquake, fire, flood, or other substantial destruction of the park, or its infrastructure;
5. Expand its "rent credit" program, so that it is identical to the one contained in the City of Rancho Cordova's MOU.
To be clear, under the proposed agreement, the City would remain free to amend its rent control ordinance at any time, to eliminate or amend one or more of the three rent increases described above. However, should the City do so, the agreement with Royal Crest would terminate, at which point Royal Crest would be free to exercise any and all of its rights, including its rights related to the five provisions set forth above.
So there is no mistake, any such agreement must be reduced to writing and signed by The Mayor and City Council
January 26, 2026
the City and Royal Crest, to make certain there is a meeting of the minds with respect to the issues being settled. Of course, should the City and Royal Crest enter into such an agreement, Royal Crest has no objection to the City entering into an identical agreement with one or more of the other parkowners within the city limits.
Part IV. Conclusion
As stated above, Royal Crest is disappointed the City Council has ceased negotiations for a mutually acceptable solution to the issue of rent increases at the park, and instead apparently intends to adopt a rent control ordinance for each and every mobilehome space within the city limits. Royal Crest is even more disappointed the City Council's change of heart appears to be based at least in part on the unfounded and misleading claims made by some of the speakers at previous City Council meetings, many of whom can afford the current rent under the City's own "affordability" guidelines, but want to receive an unearned windfall when they sell their mobilehomes and leave Fortuna.
The true fact is that for almost fifty years Royal Crest has provided a well maintained, safe and affordable place for seniors to live. During that same time frame, Royal Crest has provided monetary assistance, accepted late payments, and negotiated payment plans with those who were struggling financially, in most cases due to factors that were beyond the parkowner's control, such as the tenant's loss of a spouse, a partner, or a job.
Royal Crest is the first to agree that it is unfortunate that over the past decade the cost of operating a mobilehome park has far exceeded the increase in the Consumer Price Index.
Nevertheless, Royal Crest remains willing to attempt to negotiate a solution that enables it to continue providing affordable and quality housing for years to come, if the City is willing to do the same. If you would like to discuss any of these issues further, please do not hesitate to contact me.
Very truly yours,
Anthony C. Rodriguez
cc: Clients
Doug Johnson, WMA
Ann Nilsen, City Manager
All Fortuna Parkowners