BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 566
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: nava
VERSION: 6/30/09
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: July 7, 2009
SUBJECT:
Mobilehome park conversion
DESCRIPTION:
This bill provides that a local government may consider the
level of support that a subdivider's survey demonstrates when
approving or disapproving a mobilehome park conversion to
resident ownership.
ANALYSIS:
The Subdivision Map Act governs the division of real property
into parcels or condominiums and 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 other 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 Subdivision Map Act for
conversions of mobilehome parks to resident ownership. Under
this exemption (contained in Government Code Section 66427.5), 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:
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Surveying residents about their support for the conversion.
Offering each existing tenant an option to buy his or her
lot.
Filing a report on the impact of the conversion on
residents and making that report available to residents of
the park.
Submitting to a local agency hearing solely on the
subdivider's compliance with the law requiring avoidance of
economic displacement of non-purchasing residents.
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 (CPI);
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 period.
The legislative body or an authorized advisory agency (i.e., the
planning commission) of the local government must hold a hearing
to approve, conditionally approve, or disapprove the map. The
scope of the hearing - and therefore, the approval or
disapproval -- is limited to whether or not the subdivider
complied with the requirements of the exemption (i.e., the
bullets above).
This bill permits the legislative body or its advisory body to
consider in its hearing to approve, conditionally approve, or
disapprove a subdivision map for conversion of mobilehome park
to resident ownership whether the subdivider's survey
demonstrates that a majority of the residents of the mobilehome
park support the conversion.
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.
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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 argued that local
governments sometimes imposed conditions under the Subdivision
Map 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
Subdivision Map 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 SB 310
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 who 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 CPI.
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
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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 bill 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 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
Subdivision Map 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 Subdivision Map 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
Subdivision Map 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.
COMMENTS:
1.Purpose . The author states that in the wake of the El Dorado
decision, approximately 20 lawsuits are now pending in cities
or counties that have tried to prevent park conversions in an
effort to allow residents to remain in their homes. It is his
intent through this bill to give residents a voice through the
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survey already required when a local agency is considering a
conversion of a park to resident ownership. Existing law now
requires only that a survey be taken, not that the level of
support be a consideration in the approval of the conversion.
2.The survey requirement . AB 930 (Keeley), Chapter 1143,
Statutes of 2002, responded to the El Dorado case by requiring
a subdivider to survey residents of the mobilehome park on
whether or not they support a proposed conversion to resident
ownership. The survey must be conducted in accordance with an
agreement between the subdivider and a homeowners' association
and must be obtained as a written ballot with each occupied
mobilehome space having one vote. Once completed, results of
the survey must be submitted to the local agency as part of
the subdivision map hearing. AB 930 included uncodified
language stating the bill was intended to assure that such
conversions were "bona-fide."
Since AB 930 added the survey requirement, some local
governments have enacted local ordinances to define "bona
fide," including a requirement that a certain percentage of
residents indicate an interest in purchasing their lots.
Several of these ordinances are the subject of pending
litigation as park owners have challenged the measure of
resident support as evidence that the conversion is bona fide.
3.Arguments in opposition . The Western Manufactured Housing
Communities Association (WMA) opposes this bill because it
implies that the local agency may deny an application if the
majority of residents do not show support. WMA believes that
this bill will lead to even more litigation than current law.
"As we stated with regard to the last version, allowing a
resident veto does not address any of the issues claimed by
the proponents (i.e. non-bona fide conversions, affordability,
equity, etc.) Likewise, it remains unclear that if a majority
of residents do show support on a survey how any of these
issues are resolved."
WMA asserts that when the survey component was added to the
statutes in 2002 by AB 930, it was adopted as a tool to
collect information from residents on how to treat them after
the conversion. It was not adopted to give them power to vote
on the conversion. To support this assertion, WMA cites the
Assembly floor analysis of AB 930, which read in part:
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The fact that a majority of the residents do not support
the conversion is not, however, an appropriate means for
determining the legitimacy of a conversion. The law is not
intended to allow park residents to block a request to
subdivide. Instead, the law is intended to provide some
measure of fiscal protection to nonpurchasing residents.
4.Really about rent control ? It can be argued that bills
relating to the process for converting a mobilehome park to
resident ownership are really about rent control. As noted in
the background section above, once a single lot in a
mobilehome park is sold into resident ownership then the
entire park is removed from any local rent control ordinance
and subject to the rent increases prescribed in state law.
Because those local ordinances suppress the income that an
owner of a park can make from rents, it is typically in the
owner's interest to undertake a conversion to resident
ownership whether or not the majority of residents in that
park want to buy their lots or not. This bill would allow a
local government to consider whether a majority of residents
in a park support the conversion, so it could have the effect
of keeping a park under local rent control that could
otherwise convert and get out of that rent control.
5.Previous legislation . Last session, AB 1542 (Evans) would have
increased a local jurisdiction's authority over a mobilehome
park conversion and maintained or imposed rent control on
spaces that were not purchased when a mobilehome park converts
to resident ownership. That bill passed this committee on a 6
- 2 vote on July 3, 2007, but the governor vetoed it. His veto
message read in part:
While the bill's intent is to preserve low-income housing,
it also extends rent control in certain circumstances to
mobilehome owners in much of the state no matter what their
income level. It is unclear what state interest is served
by the extension of rent control for those who do not have
an economic disadvantage.
It is clear that mobilehome issues require a comprehensive
approach to ensure that low income individuals and families
are protected, homeownership opportunities are afforded to
those who choose them, and stability of the home and
property is preserved.
I urge the Legislature over the coming year to find a
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solution that provides true balance for all the
stakeholders involved in mobilehome issues.
6.Second hearing . This committee previously heard this bill on
June 23, 2009, when it failed on a 5 to 3 vote. At that time
the bill required that the subdivider's survey in a mobilehome
park conversion must demonstrate the support of a majority of
the residents of the mobilehome park in order for the
conversion to proceed. The author has since amended the bill
to attempt to find a less objectionable role for the survey
requirement in existing law.
7.Technical amendment . On page 3, line 13, delete "additionally"
Assembly Votes:
Floor: 41 - 31
Appr: 9 - 6
H&CD: 4 - 2
L GOV: 5 - 2
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
July 1, 2009)
SUPPORT: AARP
California Alliance for Retired Americans
California Rural Legal Assistance Foundation
California State Association of Counties
City of Capitola
City of Goleta
City of Los Angeles
City of Watsonville
County of Santa Barbara
Executive Council of Homeowners
Golden State Manufacturers home Owners League
League of California Cities
Santa Rosa Manufactured-Home Owners Association,
Inc.
Ventura County Board of Supervisors
76 Individuals
OPPOSED: Californians for Resident Ownership
California Mobilehome Parkowners Alliance
Law Offices of Gilchrist & Rutter
Western Manufactured Housing Communities
Association (WMA)
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26 individuals