On Tuesday, the owners of Palo Mobile Estates officially applied to convert their East Palo Alto mobile home park into a condominium-like park with individually owned lots. Wednesday, the group headed by a New York investor filed a $14.6 million claim against the city.
"They seem to be mutually inconsistent," City Attorney Michael Lawson said.
Richard Close, an attorney with the Santa Monica-based Gilchrist and Rutter, who represents the owners, said he also plans to file a lawsuit in San Mateo Superior Court "in the next couple weeks" against the city for placing a moratorium on the proposed conversion, a move he says is illegal.
The claim states the owners have lost $14.6 million as a result of the moratorium. Close said litigation experts calculated the damages.
The city first froze the proposed conversion on March 13 to give it additional time to research a response that protects affordable housing for current and future residents. Palo Mobile Estates residents currently pay $400 to $450 a month for the use of a lot in the park under the city's rent restrictions.
On April 24, the City Council extended the moratorium until July 27 to allow time for residents and the owners to negotiate.
Close said the moratorium is illegal because it is based on zoning rather than subdivision law.
Lawson believes the moratorium is legal.
The owner's application to convert the spaces-for-rent park into a spaces-for-sale park lacks a key requirement -- a survey of residents of the 117-space East Bayshore Road property, Lawson said.
Close said it was part of the "normal process" to submit application materials over a period of time.
He said he is discussing the language and process of conducting a survey with the residents' attorneys.
The survey has been a sticking point between park residents, the city and the property owners because Close believes it is advisory only while Lawson maintains the results can be used to influence council's decision.
Lawson said the city has 30 days to notify the owners if additional materials are needed.
The city has 45 days to respond to the claim, he said. The council will discuss the claim in an open meeting.
Close maintains the switch will not harm current tenants because they will have the option to purchase the land or continue to rent. If a family of four chooses to rent and makes less than $92,000 according to state limits for San Mateo County, its rent will be limited.
Residents with higher incomes who choose to rent will see their bill increase over four years to market rate.
Once a current renter moves or dies, the lot will become a market-rate for-sale property. Land owners will also pay fees to a homeowners' association.
Residents and council members have said they need to know the cost of purchasing a lot before they can make an informed decision.
Close said that state laws preclude him from providing that information until the application has been processed by the city and moved on to be reviewed by the state.