BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: Ab 692
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: torres
VERSION: 7/2/13
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: July 9, 2013
SUBJECT:
Mobilehome Park Purchase Fund
DESCRIPTION:
This bill expands the allowable purposes for loans the state
Department of Housing and Community Development (HCD) makes from
the Mobilehome Park Purchase Fund to include those to
rehabilitate a mobilehome park's infrastructure.
ANALYSIS:
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. In 1984, the Legislature created the
Mobilehome Park Purchase Fund (fund) to encourage and facilitate
this process for converting mobilehome parks to resident
ownership through low-interest loans to resident organizations,
individual residents, qualified nonprofit housing sponsors, or
local governments. HCD administers the fund under its
Mobilehome Park Resident Ownership Program (MPROP).
To qualify for a loan, at least 30 percent of the converting
park's spaces must be for homes owned by low-income residents.
In addition, HCD must verify that at least two-thirds of a
mobilehome park's households support the conversion to resident
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ownership, that any displacement of residents will be mitigated,
that the conversion is consistent with state and local law, and
that the conversion is financially viable.
Existing law requires HCD to adopt regulations to administer the
fund and to make loans from the fund with a term of no longer
than 30 years and an interest rate of 3% per annum, unless HCD
finds that a lower interest rate is necessary and will not
jeopardize the financial stability of the fund. Existing law
also permits HCD to establish flexible repayment terms if needed
to achieve affordable housing costs for low-income borrowers and
if such terms do not risk the security of the fund.
This bill :
1.Renames MPROP as the Mobilehome Park Rehabilitation and Park
Resident Ownership Program.
2.Permits HCD to make loans from the fund to the owner of a
mobilehome park for the purpose of rehabilitating the park's
infrastructure, including, but not limited to, water, sewage,
and electrical systems, in order to bring the park into
compliance with applicable health and safety standards.
3.Directs HCD to determine eligibility for and the amounts of
these loans by considering, among other things, all of the
following:
Current health and safety conditions in the park and the
likelihood that they could be remedied without the loan.
The percentage of spaces occupied by low-income
residents.
The reasonableness of the costs of the rehabilitation.
Any administrative and security factors affecting the
administration and operation of MPROP.
Whether the project complements the implementation of a
local program to preserve or increase the supply of
affordable housing.
Whether or not state funds are used in the most
efficient and effective manner.
The age of the park and the age of the infrastructure
that will be rehabilitated.
1.Restricts loans made to rehabilitate park infrastructure to no
more than 30 years, no more than the amount needed to bring
AB 692 (TORRES) Page 3
the park up to code and maintain affordable housing costs, and
an interest rate of 3%, unless HCD finds that a lower interest
rate is necessary and will not jeopardize the financial
stability of the fund. If an owner sells or converts a park
to another use during the term of the loan, then this bill
makes the loan balance due in full.
2.Allows HCD to establish flexible repayment terms if needed to
reduce the monthly housing costs for low-income residents to
an affordable level.
3.Prohibits HCD from making loans to reduce the monthly housing
costs of residents who are not low income or to reduce the
monthly housing costs for low-income residents to less than 30
percent of their monthly income.
4.Allows HCD to finance a mobilehome park relocation within a
jurisdiction if it determines that the cost of the relocation
is a more prudent use of funds than the costs of needed or
repetitive repairs to the existing park.
5.Excludes these loans from the requirements that HCD verify
that a conversion is supported by residents and meets state
and local law, but requires that HCD verify that the
infrastructure rehabilitation project is financially viable
and any resulting resident displacements will be mitigated.
COMMENTS:
1.Purpose . Created 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, MPROP has seen little
activity 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.
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,
but the complexity and cost of the conversion process 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. In these cases, MPROP cannot provide the funds
necessary to get the park infrastructure rehabilitated and
maintain it while keeping rents affordable to low-income
residents.
This bill expands the MPROP program to allow loans to
mobilehome park owners to resolve the most severe health and
safety problems without converting the parks to resident
ownership. HCD staff that inspect mobilehome parks report
that the most challenging health and safety problems relate to
failing infrastructure in older parks. Under this bill, loans
to rehabilitate park infrastructure would be subject to the
same conditions that apply to conversion loans, including
ensuring that rents remain affordable to low-income residents.
2.MPROP funding and history . The Mobilehome Park Purchase Fund
receives revenues from a $5 fee that mobilehome owners pay
with their annual registration fee. The fund also receives
repayments of loans HCD has made under MPROP. Currently $23
million is available. Between 1985 and 2001, MPROP provided
loans to assist with conversion in 66 mobilehome parks around
the state. Since 2002, new loan activity under the program
has slowed and continues to decline. The program had only two
successful applications in 2011 and, as noted above, none last
year. This bill enables the $23 million in the fund to be put
to use improving existing parks that provide affordable
housing to Californians.
3.Loans to private owners . Loans under the MPROP program are
currently made only to local governments, nonprofit housing
organizations, low-income residents, and resident
organizations, who are converting a park from private
ownership to resident ownership. In exchange for these
low-interest loans, HCD and the borrower must enter a
regulatory agreement that ensures the preservation of housing
affordable to low-income mobilehome park residents. HCD must
record this regulatory agreement against the park, when it has
made a loan to a nonprofit housing sponsor or local
government. This bill expands the purposes of MPROP so that
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HCD may make below-market rate loans to private owners of
mobilehome parks but does not impose any additional affordable
housing requirements on these owners or require that
regulatory agreements with them be recorded against the park.
The committee may wish to require specific affordability
provisions in HCD's regulatory agreements with private park
owners and to require HCD to record those regulatory
agreements against the park.
4.Technical amendment . On page 6, line 14, delete the comma and
insert "or to"
Assembly Votes:
Floor: 60-13
Appr: 12-5
HCD: 5-2
POSITIONS: (Communicated to the committee before noon on
Wednesday, July 3,
2013.)
SUPPORT: Golden State Manufacture-Home Owners League
(sponsor)
OPPOSED: None received.