Base Rent and Rollbacks

BASE DATE

Typically, most ordinances establish the initial legal rent as the rent that was in effect on a specified date (the “base date”) prior to the adoption of the ordinance.  

One purpose of such a provision is to protect mobilehome owners from rent increases that were made in anticipation of the adoption of a rent control ordinance.  Pursuant to this purpose, the base date may be a date just prior to initial discussions of rent control by the city council or county supervisors.

Commonly, base dates are chosen at a point six months prior to the effective date of an ordinance.  In some cases, base dates have been set at one year, or even a few years prior to the effective date of the ordinance.  

ROLLBACKS

Where rents have increased above the amount charged on the chosen base date, this type of provision has the effect of rolling rents back to a lower level.  

When these “rent rollbacks” cover a longer period, some ordinances provide that the initial legal rent level shall be defined as the rent charged on the base date as adjusted upward to compensate for inflation which has occurred since the base date (i.e. the base rent amount is multiplied by the percentage increase in the Consumer Price Index during the period between the base date and the date the ordinance was adopted).

LENGTHY ROLLBACKS

Some ordinances have utilized increasingly lengthy rollback periods in response to extraordinary rent increases. It is strongly advised that lengthy rollback periods be accompanied by carefully drafted findings which support such provisions.  Although park owners routinely object to the use of rollback provisions as being "unconstitutional," it should be noted that the California Court of Appeals has upheld the use of rollbacks (1).

REFERENCES

1. Oceanside Mobilehome Park v. city of Oceanside (1984) 157 Cal.App.3d 887 [204 Cal.Rptr. 239].

Source: The GSMOL Mobilehome Rent Stabilization Ordinance Handbook, Second Edition: Guidelines for Drafting and Enacting a Mobilehome Rent Stabilization Ordinance.

Prepared by: Bruce Stanton, Esq., Corporate Counsel

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