For the Pleasanton City Council, last Tuesday night's meeting was a love fest like none other as council members, the owner of a mobile home park and many of the residents who live there shook hands and applauded a new agreement that all three sides had rejected only a year ago.
Daniel Guggenheim, a Southern California businessman whose Guggenheim Corporation owns a number of mobile home parks in California, including Vineyard Villa in Pleasanton, won the right to gradually convert the 204-unit park facility from a rental home park into a manufactured home condominium project where resident owners of the homes could also own the lots on which their mobile homes sit.
Vineyard Villa, with a street address of 3263 Vineyard Ave., extends along Vineyard and a part of Bernal Avenue, backing onto the Arroyo del Valle at its northern border. It abuts the Hacienda Mobile Home Park to the east, which is under different ownership.
When the park first opened, it was restricted to adults only. Later, it was converted to seniors only and both Vineyard Villa and Hacienda are now restricted to those 55 years old and older, although a spouse can be younger. The parks also have changed ownership several times, but the city has controlled rents under an affordable housing agreement
Both the city and residents expressed concerns that the conversion would force them to pay prices to be determined later by Guggenheim for the land under their homes. Given today's credit crunch and difficulties prospective buyers have in finding mortgage money, there was the added concern that even those who choose to buy their lots couldn't obtain financing.
The cost of mobile homes in the park range as high as $300,000, although most sell for $95,000-$150,000.The estimated cost of the land beneath the homes would be in the $120,000-$200,000 range.
But Tuesday's agreement allayed most of those concerns with Guggenheim agreeing that no one would be forced off their lots and that they could continue renting. He also agreed not to start the conversion process before 2020 and to retain the rent stabilization agreement that controls rents.
The agreement also ends the possibility of costly litigation for Pleasanton and an even costlier court judgment against the city. Guggenheim had filed a $29-million lawsuit after both the city's Planning Commission and City Council rejected his bid to convert the park into ownership lots. In his lawsuit, Attorney Richard Close, representing The Guggenheim Corporation, argued that he and others had worked for more than two years to seek the city's approval to convert the park.
The lawsuit gained new impetus for Pleasanton after the council rejected the Guggenheim petition when after a three judge panel of the Ninth Circuit last fall in a ground breaking decision in Guggenheim v. the City of Goleta concluded that Goleta's adoption of rent control in 2002 caused "a taking of the Guggenheims' Rancho Mobile Home Park property."
The Court found that the adoption of the rent regulation was a taking because it had resulted in a huge wealth transfer from the park owner to tenants.
The Court cited evidence that space rents were
at 20 percent of fair market and mobile homes were selling at huge premiums because of rent control. The court also found that when the government imposes such onerous regulation in the name of advancing affordable housing, it is improperly imposing a burden on an individual property owner that should be borne by the community as a whole. The court left the decision of how much compensation to a lower court, which has yet to rule.
Faced with the lawsuit and believing that the city, Guggenheim and the Vineyard Villa residents were really not that far apart in accepting Guggenheim's conversion plan, City Manager Nelson Fialho discussed a compromise plan with Guggenheim and eventually arranged meetings between him and two representatives chosen by the council to negotiate an agreement—Mayor Jennifer Hosterman and Councilwoman Cindy McGovern.
Guggenheim traveled to Pleasanton several times for meetings with Fialho and the council representatives and also met with Vineyard Villa residents. Everyone found they were on common ground and the deal was made.
"All along, owning and maintaining Vineyard Villa has been my interest," Guggenheim said. "I've never had any motivation to get out of rent control or to sell this park. I hope to own it for the rest of my life, but at age 72, I've also made sure my wife and my four daughters understand my passion for keeping this park forever."
Guggenheim admitted that he had become disenchanted with some government procedures after his petitions were rejected time and time again without much explanation.
"I was pleasantly surprised t have the phone call from Nelson Fialho asking that we meet to discuss this issue," Guggenheim said. "I was frankly amazed that after all these months anyone here wanted to sit and talk about what I hope to do. And then to have two members of your council negotiate with me was even more appreciative."
He said Fialho even delayed a planned ski vacation with his family a few weeks ago to meet with him to work out the final details which were approved Tuesday.