According to Assistant Attorney General for Civil Rights Deval L. Patrick, once children were allowed into the mobile home park, the city government ordered S.G. Borello and Sons to lower the rent at Eden Roc. According to Hayward officials, the admi ttance of children into the mobile home community constituted a "service reduction" under its rent control ordinance. In late 1991, the Justice Department found Hayward's interpretation of its rent control ordinance to be in direct violation of the Fair Housing Act and filed suit in the U.S. District Court in San Francisco.
In 1992, the U.S. District Court in San Francisco agreed with the Justice Department's claim that the city should not have forced the owners of the park to lower its rent after admitting families with children. The city appealed to the U.S. Court of Appeals for the Ninth Circuit. The Court of Appeals upheld the lower court's ruling and ordered Hayward to pay damages to Borello and Sons.
Hayward attempted to appeal to the U.S. Supreme Court by filing a writ of certiorari. The Supreme Court refused to hear the case. Finally, on February 6, 1996, the city's officials decided to settle.
"This settlement is another step forward in our effort to open housing to families with children," said Patrick. "This case shows it pays for housing providers to comply with the law. We'll stand by those who try to enforce the law and prosecute th ose who stand in their way."