SAN MARCOS — Mobile home park residents say the city has failed to address the park owner’s multiple and ongoing lease violations and are asking the state Attorney General’s Office to intervene.
The Capalina Mobile Home Owners Association, representing residents of El Dorado Park located on Capalina Road, filed a complaint against the City of San Marcos with the AG’s Office on May 22.
The 93-space park is a 55+ community that houses several low-income residents.
Residents said park owner Kleege Enterprises has violated multiple areas of the long-term lease, the greatest of which is the incorrect calculation of turnover rents, or the new rent amounts applied after a mobile home in the park is sold.
Despite raising concerns with the city multiple times over the past two years, including 11 meetings between HOA representatives and city officials, the HOA said neither City Attorney Helen Holmes Peak nor the City Council have acted to enforce the regulations.
“The Park Owner consistently overcharged and completely violated the terms and formula to increase that rent,” the complaint states. “The City of San Marcos has constantly refused to use their authority as defined in the Regulatory Agreement and Long-Term Space Lease to enforce compliance.”
El Dorado is unique among the 18 manufactured home parks in San Marcos as the only park with a long-term lease agreement that exempts them from typical rent review and rent control protections.
The city of San Marcos pursued these long-term leases for its parks back in 2015 to cut down on costly legal battles regarding lease disputes. All of the city’s parks rejected the proposed lease, except El Dorado, whose residents accepted implementing the 15-year lease.
The transition to the new lease went fairly smoothly under the park’s former owner, Carlsbad Shores, LLC, but issues arose after El Dorado was sold to Kleege Enterprises for $11.5 million in 2019.
Under Kleege, residents said management has been much less responsive, the park has fallen into disrepair, and rent costs have increased exponentially with little explanation.
“I’ve seen a lot of changes,” said Ellen Amburgey, HOA treasurer and a 20-year park resident. “We’re paying more in rent and we’re getting fewer services.”
In a June 10 statement, Kleege Enterprises Director of Residential Management George Gregory said they are following the terms of the lease agreement in place in 2015.
“Kleege Capital, Kleege Enterprises has always been and will continue to abide by the terms and conditions of this Accord. As to any criticism of the terms of the Accord by the residents, Kleege Capital has been and will remain cooperative with any requests made by the City to confirm its compliance with the Accord. Kleege Capital, Kleege Enterprises remains committed to providing desirable, affordable housing in San Marcos and to its valued residents,” Gregory said.
A representative from the AG’s Office said they cannot comment on complaints received to protect the integrity of investigations.
Turnover rents
Under the long-term lease accord, the maximum increase in turnover rents for owner-occupied homes being sold cannot exceed the sum of the existing “base rent” plus 20% of the average of the highest three base rents in the park.
In 2022, Kleege repeatedly ignored the HOA when they requested to verify the calculation of these rents, as permitted in the lease. Park resident John Yobaccio was trying to sell his home at the time but ended up taking it off the market because he couldn’t get any offers. Kleege had decided that the base rent would increase by around $163, a major increase from the approximately $600 charged before.
“There was always the question of the calculation. We tried to get in for the longest time to look at the rent calculations, and we just kept getting a brick wall,” Yobaccio said. “With everything else, it was hard to sell.”
Park management finally provided information after months of pushing by former City Manager Jack Griffin, who told Kleege in August 2022 that the city would take them into mediation and arbitration if they did not provide the required information to residents.
Frank Petralia, a 10-year resident of the park and the HOA’s president, said that since then, they have been trying to get the city to enforce the turnover rent regulations. He said Kleege appears to be willfully violating the lease by using 20% of the three highest overall rents, rather than the base rent, in their calculations of turnover rent.
However, Petralia said the city has been dragging its feet and has declined to enter into arbitration or mediation with the owner as outlined in the lease. While they wait for action, residents feel like the city has abandoned them, and rents are rising.
In the spring, HOA members voted to contact the AG’s office.
“We can’t get the city to give us time or energy on this. At this point, we’re frustrated,” he said. “We waited and waited all the way until May, and I said, enough is enough.”
Peak said the city takes residents’ complaints seriously but cannot take any enforcement action while they are still investigating, analyzing and collecting data regarding turnover rents. However, she said the city has made progress and hopes to meet with HOA representatives to discuss their eventual findings.
She called residents’ decision to file a state complaint “unfortunate.”
“We have been in contact with both the current and previous park owners in an effort to determine if the rents have been correctly calculated,” Peak said. “The residents did attempt to secure information for several months before turning to the City, so we understand their concern and frustration. However, the City is actively working to secure the requested information and resolve any associated issues in conjunction with the residents and the park owner,” Peak said.
“We hope that once all of the facts are determined, the parties will be able to work through the residents’ concerns and questions. If not, we would expect all parties to abide by the dispute resolution processes contained in the agreements.”
Some residents said the long-term lease agreement is not what they imagined it would be and would prefer to have the rent control protections afforded to other parks. In fact, an amendment to the California Mobilehome Residency Law states that, as of 2025, all long-term leases for mobile home parks will no longer be exempt from local rent control.
However, the city has argued that this law will not apply to El Dorado because, under the ordinance adopted in 2015, the park is expressly exempt from rent control in the city’s municipal code.
“That ordinance amended the rent control provisions of the San Marcos Municipal Code to specifically exclude El Dorado from its terms, due to the desire of both the residents on the one hand and the park owner on the other to be bound by the terms of the agreements rather than the rent control ordinance for the term of that lease,” Peak said. “We did not reach the conclusion lightly, and the City also secured the opinion of special counsel on the issue, who concurred. If and when there is a judicial determination or a legislative change that compels or suggests a different result, we will re-evaluate.”
