BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 1542|
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                                 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





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          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  







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             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  







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          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  







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          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  8/30/07)

          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







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          City of Los Angeles
          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  







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            is sold, the four year phase-out of rent control begins.   
            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,  







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            La Malfa, Maze, Nakanishi, Niello, Parra, Plescia, Sharon  
            Runner, Silva, Smyth, Spitzer, Strickland, Tran,  
            Villines, Walters
          NO VOTE RECORDED:  Charles Calderon, Cook, Galgiani,  
            Hernandez, Ma, Solorio, Soto


          JJA:mw  8/30/07   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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