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DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTO R N EYS AT LAW City Council of the City of Santa Ana City of Santa Ana September 16, 2021 Page 32 Property rights is changing in this general area of law. The originator of the maintenance of net operating income rent control ("MNOI") procedure for the adjustment of rent, Mr. Ken Baar, saw his testimony rejected as legally unsound in Stardust Mobile Estates, LLC v. City of San Buenaventura, where Baar (and attorney and self-proclaimed historian) participated as an expert witness. His testimony was rejected on the issue of base rent market rights. Rather than come to grips with the right to market rent adjustments, Baar seems to have simply ignored the issue altogether in the discredited report. Baar now supports indexing based on 100% of CPI, not the 80% set forth in the Santa Ana proposal. Santa Ana has proposed such an extreme form of old-fashioned rent control that even Ken Baar would not recommend it. The park owner in the Stardust case contended that it was entitled to a Vega adjustment under Vega v. City of West Hollywood. The Rent Board retained experts including Kenneth Baar. Baar rejected the argument that the park owner was entitled to a Vega adjustment (to seek abase year adjustment reflecting general market conditions (as described in Birkefeld v. City of Berkeley (1976) 17 Ca1.3d 129). Baar concluded that the requested "Vega adjustments" were not warranted legally because they were not supported by the required "special circumstances." The Rent Board administrator, prepared a staff report recommending the denial of the discretionary rent increase application, relying upon the reports of Baar and an appraiser. The staff report acknowledged that rents were below market during the base year, but recommended against any Vega adjustment, relying on Baar's report. Baar further testified that even with Stardust's claimed base rental adjustment, the growth in the Park's NOI exceeded that required under the Rent Board's MNOI standard. The Rent Board refused Stardust's request to cross-examine Baar. Baar also testified that Stardust should not receive a base rental adjustment because the right to such an increase is based on a "judicial doctrine" and the courts "seem to be indicating that special circumstances [are] required" to obtain such an increase. The park owner called Park Manager Jim MacKay as its only witness. MacKay testified that his mother, while she was owner, intentionally prevented rent increases prior to the adoption of rent control because she was "very emotionally attached" to the tenants, like an "interim relief society." MacKay also described a meeting during which a representative of the tax assessor's board had explained that the Park's property taxes would be increased based upon the level of market rents that could be charged, although Stardust's rents were lower than market rates. There was no objection to MacKay's testimony during the hearing and it was not rebutted by any other evidence. The Rent Board adopted a resolution denying Stardust's discretionary rent increase application. (The resolution had been prepared before the hearing.) In the court of appeal, the position of the City and Baar was rejected. Baar took the position that Vega adjustments can only be granted where the "unique circumstances" of Vega exist. Said the court: -32-