BILL ANALYSIS �
AB 692
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Norma Torres, Chair
AB 692 (Torres) - As Amended: April 29, 2013
SUBJECT : Mobilehomes: loans.
SUMMARY : Expands the existing Mobilehome Park Resident
Ownership Program (MPROP) to allow loans for the purchase and
rehabilitation of a mobilehome park that has substantial health
and safety issues without a conversion to resident ownership.
Specifically, this bill :
1)Allows the Department of Housing and Community Development
(HCD) to make loans under MPROP to a qualified nonprofit
housing sponsor or a local government entity to purchase and
rehabilitate a mobilehome park without converting the park to
resident ownership for the purpose of bringing the park into
compliance with all applicable health and safety standards and
maintaining affordable rents for low-income residents.
2)Establishes the following terms for park purchase and
rehabilitation loans:
a) Requires that loans have a term of no more than 30 years
and sets the interest rate at 3%, unless HCD finds that a
lower interest rate is necessary and will not jeopardize
the financial stability of the program;
b) Allows HCD to establish flexible repayment terms if the
terms are necessary to reduce rents for low-income
residents to an affordable level and do not represent an
unacceptable risk to the security of the fund;
c) Limits loans to the minimum amount necessary to bring
the park into compliance with all applicable health and
safety standards and maintain rents for low-income
residents at an affordable level;
d) Prohibits the use of loans to reduce rents for residents
who are not of low income, reduce rents for low-income
residents to less than 30 percent of their monthly income,
or facilitate the purchase of a park by a qualified
nonprofit from a local public entity that had acquired the
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park prior to the commitment of the loan from the program;
and
e) Authorizes the use of loans to finance the cost of
relocating a mobilehome park to a more suitable site within
the same jurisdiction, if HCD determines that the cost of
the relocation, including any and all relocation costs for
affected households, is a more prudent expenditure than the
costs of needed or repetitive repairs to the existing park.
3)Requires HCD to take into consideration the following factors
in determining eligibility for and amount of park purchase and
rehabilitation loans:
a) The current health and safety conditions in the park and
the likelihood that unsafe conditions would be remedied
without a change in ownership;
b) The percent of spaces in the park that are currently
occupied by low-income residents, which must be at least 30
percent to be eligible for a loan;
c) The reasonableness of the costs relating to the purchase
of the park, repairs, rehabilitation, construction, or
other costs;
d) Any administrative and security factors affecting HCD's
program operation and administration;
e) Whether or not the project complements the
implementation of a local housing program to preserve or
increase the supply of housing for persons and families of
low or moderate income; and
f) Whether or not state funds are utilized in the most
efficient and effective manner.
4)Requires HCD to approve all of the following before providing
a loan:
a) Verification that either no park residents will be
displaced as a result of the park purchase or the impacts
of the displacement will be mitigated as required under
state and local law;
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b) Projected costs and sources of funds for all purchase
and rehabilitation activities;
c) Projected operating budget for the park after the
purchase; and
d) A management plan for the operation of the park.
EXISTING LAW
1)Establishes the Mobilehome Park Purchase Fund (fund) in the
State Treasury (Health and Safety Code Section 50782).
2)Imposes an annual fee of $5 per transportable section of a
manufactured home or mobilehome that is subject to annual
registration, to be deposited in the fund (Health and Safety
Code Section 18114.1).
3)Authorizes HCD to make loans from the fund to (1) individual
low-income residents of mobilehome parks that have converted
to resident ownership, (2) resident organizations that have
converted or plan to convert a mobilehome park to resident
ownership, or (3) qualified nonprofit housing sponsors or
local public entities that plan to acquire a mobilehome park,
provided that no less than 30 percent of the spaces in the
park are for occupancy by manufactured homes owned by
low-income residents (Health and Safety Code Section 50784).
4)Specifies that the purpose of providing these loans is to
reduce the monthly housing costs for low-income residents to
an affordable level (Health and Safety Code Section 50784).
5)Specifies that these loans must be for a term of no more than
30 years at an interest rate of three percent (Health and
Safety Code Section 50784).
6)Authorizes HCD to offer an interest rate below 3% if
necessary, as long as it will not jeopardize the financial
stability of the fund.
7)Authorizes HCD to establish flexible repayment terms, such as
graduated payment schedules with negative amortization, for
these loans if the terms are necessary to reduce the monthly
housing costs for low-income residents to an affordable level
and do not represent an unacceptable risk to the security of
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the fund (Health and Safety Code Section 50784).
8)Authorizes HCD to make loans from the fund to resident
organizations for the purpose of financing mobilehome park
conversion costs for a term of no more than three years and at
an interest rate of three percent (Health and Safety Code
Section 50783).
9)Specifies that loans provided to resident organizations for
the purpose of financing conversion costs shall be for the
minimum amount necessary to enable a resident organization to
acquire and convert the mobilehome park (Health and Safety
Code Section 50783).
FISCAL EFFECT : None
COMMENTS :
The Mobilehome Park Resident Ownership Program (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 $23 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 either 2010 or 2012. 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.
AB 692 expands the MPROP program to allow loans to non-profits
and local governments to purchase and rehabilitate parks that
have persistent health and safety problems without converting
the parks to resident ownership. Loans would be subject to the
same conditions that apply to conversion loans, including
ensuring that rents remain affordable to low-income residents.
There are many mobilehome parks in the state, primarily serving
low-income residents, that have persistent issues with
substandard infrastructure and a long history of health and
safety code violations. Currently, the only way to use MPROP
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funds to rehabilitate these parks to improve the living
conditions is to also convert the park to resident ownership.
However, the complexity and cost of the conversion step can
render the project infeasible. In addition, there may not be
support among residents for converting because the residents are
not in a financial position to purchase their individual lots
anyway. In these cases, MPROP can provide the funds necessary to
get the park into the hands of an operator who will rehabilitate
and maintain it while keeping rents affordable to low-income
residents.
REGISTERED SUPPORT / OPPOSITION :
Support
Golden State Manufactured Home Owners League
Opposition
None on file
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085