Senate approves substitute rent justification bill

Housing authority answers Chancery Court suit
Senators voted to modify a rent justification bill June 6. BY RON MACARTHUR
June 11, 2013

A bill to limit manufactured housing park owners’ ability to raise lot rents was modified by the Senate.

In a vote of 17-1, senators approved a substitute bill for Senate Bill 33, which would require landowners to prove any increase in lot rent higher than the three-year average increase in the consumer price index was made to compensate for the cost of operating, maintaining and improving the community.

The original bill would have given Delaware Manufactured Home Relocation Authority the power to deny rent increases to park owners.

New language introduced June 6 says park owners must give written notice of lot rent increases to the authority and to all park tenants.  If the increase exceeds the consumer price index, the authority would initiate mediation between the tenants and the park owner.

According to the substitute bill, "If the dispute remains unresolved after mediation, the authority will submit the dispute to non-binding arbitration."

Sen. Bruce Ennis, D-Smyrna, the bill’s head sponsor, said Sen. Karen Peterson, D-Stanton, recommended the substitution.

Sussex County Senators Ernie Lopez, R-Lewes; Gary Simpson, R-Milford; and Bob Venables, D-Laurel; voted in favor of the substitute bill.  Senators Gerald Hocker, R-Ocean View, and Brian Pettyjohn, R-Georgetown, were absent during the vote.  Hocker was present for the vote on another bill just 30 minutes prior to the vote on SB 33.

Authority answers lawsuit

Three landlords and two tenants of manufactured home parks in Delaware filed a class-action complaint against Delaware Manufactured Home Relocation Authority in the Court of Chancery May 6.

According to the complaint, the General Assembly gave the authority the right to adjust, eliminate or reinstate the assessment fee by Jan. 31, 2006.  “A review of DEMHRA’s board minutes between 2004 and Jan. 31, 2006, reveals that DEMHRA never adjusted the amount of the trust fund assessment,” attorney John Paradee wrote.

The authority has continued to collect fees illegally for seven years and has paid out no benefits to homeowners since 2009.

In a June 5 answer to the complaint, Deputy Attorney General Edward Black says the authority’s power collect fees did not expire in 2006 and the plaintiffs’ class action suit does not represent the interests of all manufactured community owners and tenants.

According to Black’s answer to the complaint, the authority approved the $3 monthly fee on Feb. 19, 2004, and reaffirmed that approval by unanimous consent Jan. 31, 2006.

The authority admits that no benefits have been paid out since April 2009 because, they claim, there has been no change in zoning use for any manufactured housing community because of the economic downturn, which began in 2009.  “As the economy improves, DEMHRA anticipates an increase in applications for benefits when and as manufactured home communities undergo a change in use,” Black wrote.

Mitch Crane, board chairman of DEMHRA told the Cape Gazette the lawsuit was brought in order to hinder rent justification.

“The plaintiffs’ claims are antagonistic of those manufactured community owners and tenants who will be deprived of substantial trust funds available to provide benefits when a manufactured home community undergoes a change in use,” Black wrote.

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