A Fresno judge on Wednesday told mobile home park owner Harmony Communities that it can’t close La Hacienda Mobile Estates until a final ruling is issued. The judge also put a stop to multiple ongoing evictions at the park.
In September 2023, a coalition of tenants at the mobile home park sued Stockton-based Harmony for what they say are multiple unlawful evictions, a predatory business model, and a planned closure of the park.
Attorneys for two tenant groups, Hacienda Homeowners for Justice and Trails End United for Change, filed a request for an injunction. Fresno County Superior Court Judge D. Tyler Tharpe issued a tentative ruling in favor of the tenant groups.
“Plaintiffs have shown that they are likely to prevail on the merits of several of their claims, and that they will suffer irreparable harm if the requested injunction is not granted,” said Tharpe in his ruling. “According to plaintiffs’ evidence, defendants have refused to recognize the tenancies of plaintiffs’ members despite their having resided at the park for years or even decades.”
The attorney for La Hacienda tenants, Mariah Thompson, said the order means her clients can litigate the merits of their eviction cases without fear that they will become homeless in the meantime.
“My clients are thrilled with today’s holding,” Thompson said in a text message. “The Court confirmed that the Park Owners cannot defy the City of Fresno and put dozens of families on the street without adequate relocation assistance. Nor can they avoid dealing with the merits of Plaintiffs’ claims by filing unlawful evictions against them.”
A motion from Harmony against the injunction was scheduled to be heard Thursday. However, the hearing was pushed back two weeks.
City Now Part of Legal Dispute
Disputes between Harmony, its related companies, and tenants have pulled City Hall into the legal fight.
The owners of the mobile home park sued the city of Fresno and the Mobilehome Park Rent Review and Stabilization Commission on Jan. 24, claiming the city’s refusal to allow rent increases to market rates forces them to operate at a loss.
“If we were able to charge a fair rent in line with all 20+ other parks in the city we would be inclined to stay open,” said Sherrie Johnston, chief operating officer for Harmony. “The residents and the city want us to subsidize park operations at a significant loss each year, yet are also attempting to force a private business to keep operating. We remain ready and willing to meet with the city to find a solution.”
Harmony says necessary rehab and capital improvements will cost $402,223. The company was given a $300,000 escrow credit when it purchased the park in 2023 to cover those improvements.
Johnston said that almost $400,000 was spent before the park was acquired in October 2022.
“Total expenditures for the park are approaching close to $700,000 as of today,” Johnston said in an email to GV Wire.
Johnston said they have had to bring electric and gas systems back online. She said there was “enough debris to fill a landfill.” A judge also ordered free repairs for imminent health and safety risks.
Poor conditions from prior ownership were part of the reason the park was sent into receivership.
Vice Chair of Rent Review Commission Katie Wilbur said she believes that property owners are entitled to a reasonable rate of return, but she also said Harmony knew what they were buying and it shouldn’t come at the cost of safe housing.
“I believe the property condition, their rents, as well as the current rent-controlled laws were known at the time of purchase,” Wilbur said. “I don’t find any evidence that those have changed since the time of the purchase as well as I have a hard time discerning the $400 or even $170 or even $99,000 of improvements made at the park.”
Rent Review Committee Denied Request for 150% Rent Increase
The state of California views mobile home parks differently than it does for apartments or homes. While mobile homes have significantly lower “rents,” they come with a number of caveats.
Residents own their homes but typically not the land beneath those homes. The “mobile” aspect of a home is limited. Moving a mobile home can cost more than $10,000. Finding available spaces for those homes is also challenging.
For those reasons, the state has allowed cities to have their own ordinances about how much landowners can raise rents for homeowners.
Fresno’s rules date back more than 30 years.
In an April 2022 letter to Assistant Fresno City Attorney Christina Roberson, Harmony CEO Matt Davies said he would not challenge Fresno’s rental ordinance.
“We intend to honor the ordinance as we do in all jurisdictions,” Davies said. “It’s not in our nature to litigate and the idea of us suing to overturn a 30+ year old well-settled ordinance is laughable.”
On Nov. 21, the Rent Review Commission heard the application from Harmony Communities to raise rent by 149% to $585 a month.
The state of California allows exemptions to rental increase caps based on the idea of a “right to a fair rate of return.” But committees have to approve those exemptions.
The committee denied that request, allowing only an increase of $24.92 — 6.6% — based on increases in the consumer price index.
Johnston said the city does not honor the spirit of their ordinance.
“We have always said that we will respect the city’s ordinance,” Johnston said. “By filing suit against the city we are forcing them to honor their ordinance both in words and in spirit.”
Did Harmony Cause its Own Problems?
Before the sale to Harmony, tenants asked Fresno City Council to deny transferring ownership, saying the company has a history of raising rents and evicting tenants.
Now, tenants say Harmony’s losses are of their own doing. The park has fewer than half the tenants it did before Harmony took over following dozens of evictions.
In their legal filing, Harmony’s attorneys said many of the evictions were done while the park was in receivership. Thompson countered that by saying the receiver did not evict anyone.
“The Receiver did issue notices to terminate tenancies based on alleged violations of park rules,” Thompson said. “Harmony had no obligations to take those residents to eviction and could have pursued any number of routes to help those residents come into compliance without displacing them.”
In the letter to Roberson, Davies said it was not in Harmony”s business model to evict tenants.
“I don’t believe we have evicted a single person out of one of our parks in the county over rules violations, and less than a handful over many years across the state, we are not in the business of losing tenants,” Davies said in the April 2022 letter.
Thompson said Harmony began filing evictions “almost as soon as possible.”