With Palo Alto officials preparing to rule on the fate of the Buena Vista Mobile Home Park later this month, residents of the park are challenging a key property appraisal that was used by the park owner to determine how much compensation the evicted residents would receive.
The attorneys for the Buena Vista Residents Association have recently submitted to the city a new Appraisal Review Report that vehemently criticizes the home appraisals used by the Jisser family in their Relocation Impact Report, a key document in the closure process. Now, with less than two weeks to go until the City Council considers the adequacy of the Relocation Impact Report among the last steps in the protracted closure process attorneys for the two sides are squabbling over whether the critical new appraisal should be admitted as evidence.
The new report was crafted by James Brabant, a certified real estate appraiser, at the request of the Law Foundation of Silicon Valley, Sidley Austin LLP, and Western Center of Law and Poverty, firms that have been working with the Buena Vista Residents Association. Brabant reviewed the appraisal of Buena Vista homes that was conducted more than two years ago by Beccaria & Weber and that was used to calculate the value of the mobile homes. Brabant's nine-page report concluded that the analysis included in the 32 appraisals by Beccaria & Weber was "flawed and does not provide reasonable estimates of in-place market value."
"It also appears that most of the shortcomings have resulted in an undervaluation of homes," Brabant wrote.
Brabant's assessment takes issue with the sales data that was used by Beccaria & Weber, a key consideration in determining how much compensation residents should receive when they move out. The Beccaria & Weber appraisal relied on 13 mobile-home sales, six of which took place in Buena Vista and five in neighboring communities, including Mountain View, Sunnyvale and Redwood City. Brabant's report notes that even though the Beccaria & Weber report appraised 32 mobile homes with a great variation in size, type and age, only 13 homes' values are used throughout the "comparable sales" analysis for almost all 32 appraisals.
"It looks like a very small sampling of sales was chosen from a potentially large data base that could produce misleading results," Brabant wrote.
Brabant noted that in some cases, two mobile homes were sold in the same park for two very different rates. Yet the appraisal only considered the sale with the lower price. For example, the appraisal relied on a home in Mountain View's Sahara Village that sold for $15,000 in 2012. Yet Brabant points to data showing that other homes in the complex were recently sold for $34,000. Others went for $22,000 and $20,000.
"The lower sale at $15,000 was utilized in all 32 of the appraisals," Brabant wrote. "Focusing on the lower sale and ignoring higher sales would likely produce a misleading result."
The range of the six sales from Buena Vista was from $3,000 to $29,000, according to the initial appraisal. Yet Brabant notes that he is aware of at least three Buena Vista homes that were bought for $50,000 or more. In one of the three examples, a home that was bought for $50,000 in the 2003-04 time frame was appraised for $16,000 by Beccaria & Weber. Another home, in the park's Space 110, was appraised for $30,000, even though it was sold in July 2012 for $50,000.
As part of his review, Brabant interviewed the owner of the mobile home in Space 110, Hariberto Avalos, who confirmed that he bought the home for $50,000 in July 2012 and that the home was in good condition. Avalos also reportedly said that he was unaware of the pending park closure at the time and would not have purchased it if he had known.
"He was notified of the closure about three months after he bought the home," Brabant's report states.
Brabant also notes that the prior appraisal didn't make adequate "date of value" to account for the fact that local property values have been skyrocketing. He noted that the median price for residential properties in Santa Clara County had gone from $593,000 as of January 2010 to $853,000 as of January 2015, a 44 percent increase. In Palo Alto, the trend was more significant, with the median price going from about $1.1 million to $2.2 million, an increase of 100 percent.
Attorneys for the residents are hoping that council members will consider the new analysis during their deliberations of the Jissers' closure application. However, Margaret Nanda, who is representing the Jisser family, is arguing that the Brabant report should not be admitted into the record, citing the city's appeals procedures. The procedures state that the "evidentiary record is closed" and that new documents "shall not be offered as a basis for decision on appeal, except that Council may allow new evidence if a party can demonstrate that newly discovered and relevant evidence exists that could not have been discovered with the exercise of reasonable diligence during the initial proceeding before the Hearing Officer." In this case, she argued, the information could have been commissioned and submitted months ago, during the initial hearing process last year.
The Residents Association, Nanda wrote, "must not be permitted to benefit from attempting to shirk previously established appeal procedures because they feel entitled to do so." There is no loophole, she wrote, that allows the admission of the appraisal and the accompanying Trulia listing, which purport to demonstrate the rising housing values.
"The proposed evidence is neither relevant, nor can be shown to have not (been) obtainable during the hearing procedure by a party exercising reasonable diligence," Nanda wrote on March 25. "Moreover, admitting the additional evidence would be extremely prejudicial to the Park Owner. The prejudice outweighs any probative value the proposed evidence may offer because the evidence is clearly not relevant and because it has been put forth in a way that intentionally circumvents the agreed upon procedures governing the process."
But while Nanda is criticizing the residents for submitting last-minute documents in an attempt to sway a decision, attorneys for the residents note that the Jissers' attorney employed the same practice during the May 2014 hearings in front of Hearing Officer Craig Labadie. During the last of the three hearings, Nanda agreed to revise the package to offer residents a 100 percent rent differential (the difference between their Buena Vista rents and the rents at their new homes), rather than the 40 percent proposed in the report. The last-minute addendum, wrote Nadia Aziz, an attorney with the Law Foundation, was done "at the end of the hearing, after all the testimony had concluded, and with no opportunity for the Residents Association to question the owner or its witnesses about the addendum."
"Given that the Hearing Officer allowed the owner to make last-minute additions to the RIR regarding the appraisals described in the RIR, without rebuttal and without any mechanism to appeal those unknown future amounts, the City should allow this report to serve at least as rebuttal of the methodology of the appraiser that will likely be performing those appraisals."
The report comes at a critical time for the roughly 400 Buena Vista residents who would be evicted if the mobile-home shutters. The Jisser family, which owns the park at 3980 El Camino Real, has been trying to close the park since fall of 2012.
Last year, the closure effort scored two big victories. In February 2014, the city signed off on its Relocation Impact Report, an analysis that offers compensation packages to the roughly 400 residents. In October, Labadie concurred that the report is adequate, paving the way for the park's closure. Residents are now appealing the Labadie decision, and the City Council is set to hear the appeal on April 13 and 14.
The new correspondence comes despite an explicit decision by the City Council in January to limit the new arguments from each side to 10 pages. In addition to various letters about appeals procedures and the new report, both Nanda and the Residents Association followed up with a 10-page "pre-hearing statement" summarizing their respective arguments.
Nanda wrote in her pre-hearing statement that the arguments raised by the Residents Association have already been considered and addressed by Labadie and noted that local law "clearly contemplates that it is the Hearing Officer to whom the decision as to the adequacy of the mitigation assistance is given."
"The Park Owner met the burden of proof by a preponderance of evidence," Nanda wrote.
Attorneys for the residents maintain in their pre-hearing statement, as they had all throughout the process, that the relocation measures proposed by the Jissers "lack substance and create no realistic expectation that residents will be able to find and secure comparable housing in a comparable community."
"The families who live at Buena Vista will likely be forced to move farther from their jobs and families, to leave the high-quality schools that their children are attending, and to say goodbye to the community that they have built in the years or even decades that they have lived in the park," the Residents Association stated. "The proposed mitigations are not sufficient, and the City Council should deny the owner's request to close Buena Vista."