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ELS Rent Control Lawsuit

Contempo Marin is a 397-unit mobile home park on Yosemite road near Smith Ranch Road in the northern part of the City of San Rafael.  Of the nearly 1,000 people who live in the park many are retired senior citizens. There are also working couples with young children. It has been designated by the City of San Rafael as an affordable housing community. Many city, county and government employees like postal workers, firefighters, retired police officers, school teachers and others rely on the affordable housing at Contempo Marin for a place to live.

The park was opened in 1972 and many of its residents date from that era.  Most homes are doublewide units with about 1,400 square foot interiors and are well-maintained by the homeowners.  The park’s amenities include a large lagoon with a 1/2-mile walking path around it, and a clubhouse with activity rooms, a swimming pool, and a hot tub.

The City of San Rafael enacted a rent control ordinance in 1989, which limits rent increases for home sites at Contempo Marin to an amount pegged to the annual cost of living increase.  

Residents hold title to their homes but don’t own the land on which their homes sit, which they rent. Some homes are fully paid for, and others have mortgages. Rents currently range from $665 to $800 per month.  Other fees for water, garbage, utilities, and common-area property improvements are paid by residents in addition to their base rent. The owner of the land, the clubhouse, and other common-area amenities is Equity LifeStyle Properties, Inc, a two billion dollar nationwide real estate investment firm headquartered in Chicago. The Chairman of the Board is billionaire Sam Zell. Zell is currently number 52 on the Forbes 400 list of the richest Americans. Zell has been acquiring undervalued RV and mobile home parks in 28 states since the early 90’s. Currently his company controls 311 parks totaling 112,779 residential sites with rental revenues of 200 million per year.

When Zell acquired the rent controlled park in 1994, he filed suit against the City in Federal Court challenging the ordinance as unconstitutional. The previous owner had attempted a similar challenge against the city in the state court but was defeated. 

In January 2008, eight years after the case was filed, Judge Vaughn Walker issued his Findings of Fact and Conclusions of Law ruling in favor of the landowner and ordering the city to cease any further enforcement of the ordinance, essentially ending rent control for the park. The judgment in the lawsuit between the City of San Rafael and Contempo Marin Homeowners Association and MHC Financing Limited Partnership was entered by the United States District Court for the Northern District of California on June 30th 2009.

Existing residents of Contempo Marin would be able to continue to pay pad rentals as before under the provisions of the Ordinance for a period of ten years (June 30th 2019). The Ordinance will no longer be in effect for any buyer who purchases a home after 1st July 2009.   

In the meantime, based on the Federal Court’s decision Equity LifeStyle Properties notified residents their monthly rent will be $1,925, nearly triple the current rent being charged. While this court decision could be reversed on appeal, the residents have no assurance that an interim remedy can be found to mitigate the catastrophic rent increase during the appeal process. Many of Contempo Marin’s residents are on fixed incomes.  Faced with a rent increase of this magnitude many will be forced to abandon their homes and mortgages, including any equity they may have. Furthermore, deregulation of rents instantly wipes out the resale value of all the homes, dramatically reducing the net worth of every homeowner in the park.

The City of San Rafael when contested this decision by appealing the case to the US 9th Circuit Court of Appeals.   The city has a strong practical motivation to maintain the park’s large stock of affordable housing, which the state sanctions local governments to provide and preserve. The Contempo Marin Homeowners Association’s interests are represented pro-bono by the firm of Cooley, Godward, Kronish, LLP in San Francisco.  The Association and its counsel believe that the decision will be reversed on appeal. The city of San Rafael as defendant in the case and the Contempo Marin Homeowners Association as defendant-intervene appealed Judge Walker’ decision to the 9th Appeals. 

In April of 2013 a three-judge panel of the 9th Circuit then petitioned the 9th Circuit Court of Appeals to deny this request. ELS then petitioned the United States Supreme Court for a writ of certiorari which, if granted, would result in a review of the 9th Court. ELS’s petition for certiorari was joined by some amicus curiae (friends of the court) briefs and the City and the HOA filed briefs in response the week of December 2nd It is expected that the Supreme Court will discuss the briefs early in January 2014 and issue their decision as to whether to grant or deny the petition for certiorari. If granted, the case could be remanded back to the 9th ordinance remains in effect. Circuit Court reversed Judge Walker’s ruling. ELS Circuit Court for an en banc hearing before an 11-judge panel. The 9th  Circuit. If denied, the case is over and the City’s rent control

During 2013-14 the 9th Circuit Court of Appeals ruled in favor of the City San Rafael and over turned Judge Walker's ruling.  ELS appealed to the Supreme Court.  The Supreme Court refused to accept the case.  The city of San Rafael and the residences of Contempo Marin have won their fight to maintain and enforce the rent control ordinance.  This case and lawsuit is now over.