Yee

In these consolidated appeals, plaintiffs John and Irene Yee, owners of two contiguous mobilehome parks in the City of Escondido (the City) subject to rent control, appeal the denial of their petitions for writ of mandate seeking to invalidate the City’s decision authorizing only a $27.50 increase in rents. We conclude that the decision of the Escondido Mobilehome Rental Review Board (the Board) is not supported by substantial evidence and hence the judgment must be reversed and file matter remanded to the Board for reconsideration.

To aid the Board on remand we note the following. While the Board purported to follow the fair “return on equity” approach to determine the Yees’ claim for increased rents, it appears to have committed a serious error by failing to account for interest payments on the encumbering loans in determining the income (or loss) resulting from operation of the parks. In attempting to justify the Board’s result on appeal by means of a different theory, the City improperly treats property appreciation and tax shelter benefits as imputed income in assessing the Yees’ total return on their investment. On remand, however, the Board would not be precluded…