BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1542|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 1542
Author: Evans (D), et al
Amended: 6/5/07 in Assembly
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 6-2, 7/3/07
AYES: Lowenthal, Cedillo, Corbett, Kehoe, Simitian,
Torlakson
NOES: McClintock, Ashburn
NO VOTE RECORDED: Dutton, Harman, Yee
SENATE JUDICIARY COMMITTEE : 3-2, 7/10/07
AYES: Corbett, Kuehl, Steinberg
NOES: Harman, Ackerman
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 41-32, 6/7/07 - See last page for vote
SUBJECT : Mobilehome park conversions
SOURCE : City of Santa Rosa
County of Sonoma
DIGEST : This bill maintains local rent control on lots
that are not purchased by residents within a mobilehome
park that converts to resident ownership.
ANALYSIS : The Subdivision Map Act (Act) governs the
division of real property into parcels or condominiums and
CONTINUED
AB 1542
Page
2
requires that a subdivider file a tentative map for
approval by a local agency. Under the Act, a subdivider of
a mobilehome park who wishes to convert that park to
another use must file a tentative or parcel map and must
also file a report on the impact of the conversion on
residents of the park. This report must specifically
address the availability of adequate replacement space in
mobilehome parks. When approving the map, the local agency
may require that the subdivider take steps to mitigate any
adverse impacts of the conversion on the displaced
residents of the park.
Existing law creates an exemption to the Act for
conversions of mobilehome parks to resident ownership.
Under this exemption (Section 66427.5 of the Government
Code), a subdivider of a mobilehome park submits a
tentative or parcel map to the local agency for review and
approval. This exemption requires the subdivider to avoid
the economic displacement of non-purchasing residents by:
1. Offering each existing tenant an option to buy his/her
lot.
2. Filing a report on the impact of the conversion on
residents and making that report available to residents
of the park.
3. Surveying residents about their support for the
conversion.
4. Submitting to a local agency hearing solely on the
subdivider's compliance with the law requiring avoidance
of economic displacement of non-purchasing residents.
5. Limiting rent increases of non-purchasing, low-income
residents by an amount equal to the average monthly
increase in rent in the four years immediately preceding
the conversion, except that in no case shall the
increase be greater than the increase in the Consumer
Price Index.
6. Limiting rent increases on those non-purchasing
residents who are not low-income to market-rate levels
through equal annual increases spread over a four-year
AB 1542
Page
3
period.
This bill:
1. Permits the local government to review matters beyond
compliance with the law on avoiding the economic
displacement of residents.
2. Provides that only in the absence of local rent control
shall the limits on rent increases that may be charged
non-purchasing residents apply (i.e., those in #5 and #6
above).
3. Maintains local rent control measures on spaces that are
not purchased when a mobilehome park converts to
resident ownership.
Background
The residents of California's nearly 5,000 mobilehome parks
typically own their mobilehomes and rent the spaces in
mobilehome parks on which the homes are placed.
Mobilehomes, once placed in a park, are difficult to
relocate. Because of this, many local governments impose
mobilehome park space rent controls to limit the amount
that rent on a space can increase each year. As the value
of the land under a mobilehome park increases, rents for
those spaces may not increase commensurately in local
communities with rent control ordinances.
For various reasons, mobilehome park residents in some
parks have decided to join together and buy the park or
their individual spaces within it. This is referred to as
a conversion to resident ownership.
Historically, when mobilehome parks have converted to
resident ownership, the residents have initiated the
process and enlisted the help of a nonprofit organization.
The nonprofit organization typically buys the entire park
and sells lots to individual owners.
Until 1996, local jurisdictions imposed their own
conditions on proposed subdivisions of mobilehome parks
into individual, resident-owned lots. In the 1990s, some
AB 1542
Page
4
argued that local governments sometimes imposed conditions
under the Act that prevented the conversion of a park into
resident ownership. For example, a local government might
condition the map on the building of sidewalks, curbs, and
gutters on the streets in the mobilehome park. In 1995,
then Senator Craven introduced a bill to address this
issue.
SB 310 (Craven), Chapter 256, Statutes of 1995, amended the
Act to ensure that subdividers of mobilehome parks gave
residents the opportunity to purchase a space in the park
and to avoid being displaced if they could not afford to
purchase a space. Under this law, residents who cannot
purchase their spaces are allowed to remain as renters, and
the bill prescribed a formula for how rents for
non-purchasing residents would be calculated. That formula
raises rents to market levels over a four-year period,
except those renters that are low-income may only have
their rents increased by the average monthly increase in
rent in the four years immediately preceding the
conversion, but in no case by more than an amount equal to
increases in the Consumer Price Index.
In 1993, the owner of the El Dorado Mobile Country Club, a
377-space mobilehome park in Palm Springs, filed a
tentative subdivision map as a first step to converting the
park to resident ownership by existing residents or other
persons.
The Palm Springs City Council, concerned that this was a
"sham" conversion to circumvent its local rent control
ordinance, approved the map subject to several conditions,
including that the effective map date would be the date
escrow closed on 120 lots in the park. Under this
condition, the park would cease to be subject to the city's
mobilehome space rent control ordinance when 120 of its
lots sold. After that date, the formula for mitigating
economic displacement under SB 310 would be applicable.
This would prevent circumventing the rent control ordinance
by just selling a few lots (i.e., a "sham" conversion).
El Dorado's owner filed a lawsuit in superior court to
compel approval of the subdivision map without the
conditions, including the condition delaying the effective
AB 1542
Page
5
date of the map. El Dorado's owner claimed that the
effective date of conversion was when one lot was sold, and
the city council did not have the power to impose more
stringent requirements. The lower court denied the park
owner's petition, but in 2002, the 4th District Court of
Appeal reversed that decision ruling in favor of the park
owner in El Dorado Palm Springs, Ltd., v. City of Palm
Springs .
The appellate court ruled that the city was limited to the
scope of assuring that El Dorado's owner had complied with
requirements of Section 66427.5, the exemption to the Act
enacted by SB 310. The court ruled that Section 66427.5
takes effect as soon as one unit is sold, and therefore,
its rent formulas supersede a local rent control ordinance
as soon as that first lot is sold.
The proponents of SB 310 did not foresee instances in which
mobilehome park owners, rather than residents, would use
its exemption to the Act to convert their parks into
condominium-type parks, where the owner subdivides the park
and sells spaces to the residents.
Since the owner of El Dorado Park in Palm Springs first
used the Act for conversion to resident ownership, many
more mobilehome park owners have pursued this type of
conversion. This has set up a conflict between park owners
and park residents over the use of existing state law for
conversion of parks to resident ownership.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 7/24/07)
City of Santa Rosa (co-source)
County of Sonoma (co-source)
American Planning Association, California Chapter
California Rural Legal Assistance Foundation
California State Association of Counties
City of Carson
City of Cloverdale
City of Cotati
City of Hayward
AB 1542
Page
6
City of Scotts Valley
City of Winters
County of Santa Cruz
Eden Gardens Mobilehome Park Homeowners Association
(Hayward)
Golden State Manufactured-Home Owners League
Golden State Manufactured-Home Owners League, Inc., Chapter
416
Hayward Country Club Mobilehome Owners Association
Hayward Mobilehome Owners Association
League of California Cities
Mayors' and Councilmembers' Association of Sonoma County
Pacific Grove Mobile Home Park Homeowners Association
(Capitola)
Palo Mobile Estates Homeowners Association (East Palo Alto)
Pueblo Springs Mobilehome Owners Association (Hayward)
State Building and Construction Trades Council of
California
Trailer Haven Homeowner's Association (Santa Cruz)
Western Center on Law and Poverty
OPPOSITION : (Verified 7/24/07)
California Association of Realtors
California Mobilehome Parkowners Alliance
Californians for Resident Ownership
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT : According to the author:
"Mobilehomes have traditionally provided affordable
housing to people that would otherwise be priced out of
any type of ownership. [Therefore] local rent control
ordinances keep mobilehomes at an affordable rate for
seniors and working families who are on a fixed income.
"Current law allows a mobilehome park to be subdivided
into residential ownership. The original law was written
in order to give the residents of mobilehome parks an
opportunity to buy the land they live on.
"Serious unintended consequences have surfaced (as a
result). For instance, if one parcel in a mobilehome park
is sold, the four year phase-out of rent control begins.
AB 1542
Page
7
This means that a parcel that is rented for $600 today
may be rented for $1000 to $1500 in a very short four
years. The end result is that the affordable housing
stock will be severely compromised. Seniors and working
families will be pushed from their homes.
"In the past few years, there has been a surge in
applications being filed by park owners who want to
convert their parks from rental mobilehomes into
residential ownership. This is often being done over the
protests of local government and residents of the parks,
who have no recourse to stop the conversion.
"AB 1542 does not ban conversions. Instead, it strikes a
balance between an outright ban on conversions, and no
regulation at all."
ARGUMENTS IN OPPOSITION : Opponents note that existing
law provides for state regulation of rent increases after a
park converts, that local control of conversions will add
delay to the process, and that delaying the process will
discourage owners from converting, thus eliminating
homeownership opportunities for those who wish to buy their
lots. Writing in opposition, Western Manufactured Housing
Communities Association (WMA) states that there has been no
showing of any harm to a resident from conversions that
have taken place. Additionally, WMA writes that this bill
further confuses the conversion process, because it creates
separate conversion rules for communities with local rent
control and those without rent control.
ASSEMBLY FLOOR :
AYES: Arambula, Bass, Beall, Berg, Brownley, Caballero,
Carter, Coto, Davis, De La Torre, De Leon, DeSaulnier,
Dymally, Eng, Evans, Feuer, Fuentes, Hancock, Hayashi,
Huffman, Jones, Karnette, Krekorian, Laird, Leno, Levine,
Lieber, Lieu, Mendoza, Mullin, Nava, Portantino, Price,
Richardson, Ruskin, Salas, Saldana, Swanson, Torrico,
Wolk, Nunez
NOES: Adams, Aghazarian, Anderson, Benoit, Berryhill,
Blakeslee, DeVore, Duvall, Emmerson, Fuller, Gaines,
Garcia, Garrick, Horton, Houston, Huff, Jeffries, Keene,
La Malfa, Maze, Nakanishi, Niello, Parra, Plescia, Sharon
AB 1542
Page
8
Runner, Silva, Smyth, Spitzer, Strickland, Tran,
Villines, Walters
NO VOTE RECORDED: Charles Calderon, Cook, Galgiani,
Hernandez, Ma, Solorio, Soto
JJA:mw 7/24/07 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****