BILL ANALYSIS Ó
AB 225
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CONCURRENCE IN SENATE AMENDMENTS
AB 225 (Chau and Nestande)
As Amended August 20, 2014
2/3 vote. Urgency
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|ASSEMBLY: | |(May 16, 2013) |SENATE: |32-0 |(August 25, |
| | | | | |2014) |
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(vote not relevant)
Original Committee Reference: TRANS.
SUMMARY : Gives the Department of Housing and Community
Development (HCD) greater flexibility in its administration of
the Mobilehome Park Resident Ownership Program, including
allowing HCD to lend these funds for individuals to repair their
mobilehomes and for nonprofit sponsors or local public entities
to acquire mobilehome parks.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Rename the Mobilehome Park Purchase Fund as the "Mobilehome
Park Rehabilitation and Purchase Fund."
2)Rename the Mobilehome Park Resident Ownership Program as the
"Mobilehome Park Rehabilitation and Resident Ownership
Program" (MPROP).
3)Permit HCD to make loans from the fund to nonprofit housing
sponsors and local public entities to acquire a mobilehome
park, provided that no less than 30% of residents at the time
of acquisition are low-income. Such loans must be to either:
a) Cure significant outstanding violations of state law
governing health and safety in mobilehome parks.
b) Support a park acquisition that in the determination of
HCD will substantially benefit low- and moderate-income
homeowners, including maintaining affordable space rent
level.
1)Require HCD to make loans for the minimum amount necessary to
bring the park into compliance with all applicable health and
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safety standards and maintain affordability, for no more than
40 years at 3% interest, and not exceed 115% of the value of
the collateral securing the loan.
2)Direct HCD to determine eligibility for and the amounts of
these loans by considering, among other things, all of the
following:
a) Current health and safety conditions in the park and the
likelihood that they could be remedied without the loan;
b) The degree to which the loan will benefit lower-income
homeowners; and
c) The age of the park and the age of the infrastructure
that will be rehabilitated.
1)Require HCD, before making a loan, to verify the projected
operating budget of the park, funds for and costs of purchase
and rehabilitation, and that no park residents will be
involuntarily displaced as a result of the purchase or that
the displacement shall be mitigated as required under state
and local law.
2)Permit HCD to make loans to resident organizations or
qualified nonprofit sponsors to assist lower-income homeowners
to make needed repairs or make accessibility-related upgrades
under the following circumstances:
a) Applicants must otherwise have qualified for an
MPROP loan; and
b) Applicants must demonstrate sufficient
organizational stability and capacity to manage a
portfolio of loans to individual homeowners.
1)Allow HCD to adopt guidelines to implement the repair and
accessibility-related upgrade loan program.
2)Increase the loan term for loans to individual low-income
homeowners from 30 to 40 years.
3)Increase the loan term for loans to resident organizations
from 30 to 40 years, and from 100% to 115% of the value of the
collateral securing the loan.
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4)Include an urgency clause.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill will have the following fiscal effects:
1)Unknown increased expenditure of funds for new loans for
mobilehome repairs and upgrades, and as a result of potential
increased demand for park purchase loans due to more flexible
terms; and
2)Minor costs to HCD.
COMMENTS:
Background: The residents of California's nearly 5,000
mobilehome parks typically own their mobilehomes and rent the
spaces in the mobilehome park in which the homes are placed.
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.
MPROP was created in 1984 to provide low-interest loans to
finance the conversion of mobilehome parks to resident ownership
and ensure that low-income residents' housing costs remained at
an affordable level after conversion. The program is funded
through a $5 fee that certain mobilehome owners pay along with
their annual registration fee, as well as through loan
repayment. There is currently about $34 million in the MPROP
fund.
New loan activity under MPROP has been slow in recent years,
with only a handful of loans made since 2007. The program had
no successful applications in 2010, 2012, or last year. HCD
points to the increasing cost and complexity of park conversions
as two of the primary reasons for the reduction in the number of
successful applications.
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Purpose of this bill: The author introduced this bill to
facilitate programmatic changes to MPROP that will make the
application and loan requirements more attractive to potential
borrowers. The changes will ensure that HCD can use the
accumulated funds to preserve affordable homeownership
opportunities. This bill aims to achieve three key goals.
First, the bill aims to make MPROP work better for conversions
to resident ownership. This bill would make several changes to
ensure the most attractive loan terms for resident-initiated
conversions. These include increasing the maximum loan-to-value
ratio to 115% for loans made to resident organizations, and
allowing for a longer repayment period to better match MPROP
loans with other potential funding sources, such as loans from
the Federal Housing Administration.
Second, this bill would ensure that MPROP can be used for
acquisition and rehabilitation of mobilehome parks by nonprofit
developers who will own and operate the park. Some parks in
California are suffering from years of neglect, leading to
substandard conditions within the park. If not remedied, the
park could eventually close, displacing the homeowners. With
many troubled parks, having a nonprofit owner take over
ownership and management while undertaking repairs can stabilize
the park and ensure that it remains an affordable source of
housing. This bill streamlines MPROP rules governing
acquisition by nonprofits by separating in statute the MPROP
funding rules for nonprofit acquisitions from those governing
conversions to resident ownership, and provides attractive loan
terms for nonprofit acquisitions. The proponents believe this
will ensure that the program better supports funding for
nonprofit acquisition and rehabilitation.
Third, this bill would allow a portion of the funds to be used
by homeowners for rehabilitation and accessibility improvements.
This bill authorizes MPROP funds to be used to provide low-cost
loans to low-income homeowners in need of minor repairs or
accessibility upgrades for their homes, to be provided in
connection with an MPROP-funded acquisition or conversion by
resident organizations or qualified nonprofit sponsors.
This bill was substantially amended in the Senate and the
Assembly-approved version of this bill was deleted. This bill,
as amended in the Senate, is inconsistent with Assembly actions
and the provisions of this bill, as amended in the Senate, have
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not been heard in an Assembly policy committee.
Analysis Prepared by : Rebecca
Rabovsky / H. & C.D. / (916) 319-2085
FN:
0005450