BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 510
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: jackson
VERSION: 2/21/13
Analysis by: Carrie Cornwell FISCAL: NO
Hearing date: April 23, 2013
SUBJECT:
Mobilehome park conversion to resident ownership
DESCRIPTION:
This bill authorizes a local government to disapprove the
conversion of a mobilehome park to resident ownership if the
required survey of park residents does not show that a majority
of them support the conversion.
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. In almost all
cases the local agency's approval of the subdivision is a
discretionary act. Existing law, however, provides for a few
situations in which a local agency must deny the subdivision
map, such as if the map is inconsistent with the community's
general plan.
The Subdivision Map Act establishes a different process for
conversions of mobilehome parks to resident ownership, which
severely limits a local agency's discretion. Under this process
(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. Government Code Section 66427.5
requires the subdivider to avoid the economic displacement of
non-purchasing residents by:
Surveying residents about their support for the conversion.
The subdivider must conduct the survey in writing and in
accordance with an agreement between the subdivider and the
homeowners' association, and the subdivider must submit the
results of the survey when filing the tentative or parcel map
so that they can be considered as part of the local agency's
hearing.
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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 provisions of law to avoid the economic
displacement of non-purchasing residents (i.e., the bullets
above).
This bill :
1.Authorizes a local agency to disapprove a map to convert a
mobilehome park into resident ownership if it finds that the
survey results do not demonstrate at least majority support
among the homeowners for the conversion.
2.Authorizes local legislative bodies to enact regulations to
implement the requirement that a subdivider wishing to convert
a mobilehome park to resident ownership conduct a survey of
support for the proposed conversion and that a local agency
may disapprove the map if the survey does not demonstrate
majority support among homeowners.
3.Declares that its amendments to the Subdivision Map Act (i.e.,
1 and 2 above) are declaratory of existing law, thus
indicating that the Legislature always intended for local
agencies to be able to disapprove a map to convert a
mobilehome park if the resident survey did not show majority
support; that the intent of the Legislature has been and
continues to be that a local agency must consider the level of
resident support for the proposed conversion in making its
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decision to approve, conditionally approve, or disapprove the
map; and that the local agency has the authority at its
discretion to disapprove the map if it finds that the results
of the survey have not demonstrated at least majority support
among the park's homeowners.
COMMENTS:
1.Purpose . The author notes that mobilehomes have traditionally
provided affordable housing to people who would otherwise be
priced out of any type of ownership. Local rent control
ordinances keep mobilehome space rents at an affordable rate
for seniors on fixed incomes and working families who are
struggling to get by. Developers seeking financial gain by
converting to resident ownership threaten the affordability
and stability that mobilehomes provide for people seeking
affordable housing.
Current law allows a mobilehome park owner to subdivide the
park into residential ownership but the park owner must
conduct a survey of support from the residents. The author
notes that because of the lack of clarity in the provision of
the Subdivision Map Act governing park conversions, park
owners and their attorneys argue that local agencies may not
consider the survey results as a factor in the conversion
process. The author asserts that courts have split on the
meaning of the survey with sometimes absurd results for the
low- and moderate-income homeowners that this law was
originally intended to protect. This continued uncertainty
has spawned dozens of lawsuits, and the courts have repeatedly
urged the Legislature to clarify the law.
This bill makes clear the role of the survey and gives local
governments more statutory recourse and authority during the
conversion process.
2.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.
For various reasons, mobilehome park residents in some parks
have decided to join together and buy the park or their
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individual spaces within it. This is referred to as a
conversion to resident ownership.
Historically, when mobilehome parks converted to resident
ownership, the residents 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, added Section
66427.5 to the Subdivision Map Act to limit local review of
the subdivision application and 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. SB 310 limited local review
of an application to subdivide a park into resident-owned
spaces solely to comply with its provisions, which are to
avoid the economic displacement of non-purchasing residents.
3.The El Dorado case . 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. 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. The city council included this condition to
prevent the park owner's circumvention of the rent control
ordinance by just selling a few lots (i.e., a "sham"
conversion).
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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 state law limited the city's
scope to assuring that El Dorado's owner had complied with the
requirements of Section 66427.5, the special process in 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 had not foreseen 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. 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, and this circumstance can create an
incentive for a mobilehome park owner to convert his or her
park to resident ownership.
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, which has resulted
in both legislation and litigation.
4.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 park owner must conduct the survey by written
ballot, in accordance with an agreement between the subdivider
and homeowners' association, and with each occupied mobilehome
space having one vote. The park owner must submit the results
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of the survey 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. Park
owners have challenged several of these ordinances in court.
In 2010, the 2nd District Court of Appeal, in Colony Cove
Properties, LLC v. City of Carson, invalidated the City of
Carson's ordinance, which depended on certain percentages of
support in the resident survey to make presumptions about
whether a conversion was bona fide or not. While the court
invalidated the ordinance, it did leave open the possibility
that a local government could consider the survey in its
action at the hearing on the map application. In 2012, the
4th District Court of Appeal concluded in Chino MHC, LP v.
City of Chino, et. al., that "a local agency is entitled to
deny a conversion based on the survey results. However, it
may only do so if the survey results show that the conversion
is a sham." The court noted that "a sham conversion is one
that is merely intended to avoid rent control and not to
transfer ownership to residents." Also in 2012, the 6th
District Court of Appeal in Paul Goldstone v. County of Santa
Cruz upheld that county's authority to deny a conversion
application due to near unanimous opposition to a conversion
from park residents.
5.Courts urge Legislature to clarify the law . In both Colony
Cove Properties and another decision, Palisades Bowl Mobile
Estates, the 2nd District Court of Appeal expressed "hope that
the Legislature will recognize the dilemma faced by local
agencies illustrated by [these cases] ? and act to clarify the
scope of their authority and responsibility." The 6th
District Court of Appeal made a similar plea in Paul Goldstone
v. County of Santa Cruz last year when it urged the
Legislature to instruct local agencies on how to consider the
results of the resident survey. This bill addresses that hope
and provides instruction, because it gives local governments
authority to consider the results of the resident survey and
to deny an application to convert to resident ownership based
on a lack of majority support.
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6.Arguments in opposition . The Western Manufactured Housing
Communities Association (WMA) opposes this bill because it
would severely limit, if not eliminate park owners' ability to
subdivide their land and sell it to the individuals residing
in the community. It asserts that the current law, written by
former Senator Bill Craven, has worked well over the past 18
years by balancing the needs of the residents and park owners
in the community. The benefits for the residents are
affordable home ownership or statewide rent control for
low-income residents who opt not to purchase (even in
communities that do not have rent control) and a gradual phase
in of market rents for non low-income residents who elect not
to purchase. The benefit to the park owners is a long-term
exit strategy to put the land to alternative use and realize
reasonable economic value for their investment under one
uniform statewide law rather than hundreds of different rules
and regulations in hundreds of different jurisdictions across
the state.
Another opponent states that park owners, not existing
tenants, have the right to decide whether their property will
be converted to resident ownership, deeming this bill an
affront to the property rights of park owners that will
ultimately result in the dramatic loss of affordable housing.
7.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
comment #3, the El Dorado case, 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 specifically
allows a local government to disapprove conversion, so it
could have the effect of keeping mobilehome parks under local
rent control ordinances that could otherwise convert and get
out of that rent control.
8.Local ordinances or regulations . This bill authorizes
legislative bodies to "enact local regulations" to implement
the requirement that a subdivider wishing to convert a
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mobilehome park to resident ownership conduct a survey of
support for the proposed conversion. The phrase "local
regulations" appears nowhere elsewhere in state law, which
typically confers to local governments authority to implement
state law either by ordinance or resolution. The committee
may wish to strike from the bill "enact local regulations" and
insert that local legislative bodies may by ordinance or
resolution implement its provisions.
9.Previous legislation . Last session, SB 444 (Evans) would have
permitted a local government subject to an application to
convert a mobilehome park to resident ownership to all
relevant state laws, including the Subdivision Map Act. That
bill passed this committee by a vote of 5-2 on May 3, 2011,
but failed on the Senate floor in June 2011.
In 2009, AB 566 (Nava) would have allowed a local government
to consider the level of support that a subdivider's survey
demonstrates when approving or disapproving a mobilehome park
conversion to resident ownership. That bill passed this
committee by a 7-4 vote on July 14, 2010, but Governor
Schwarzenegger vetoed it.
In 2007, 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 Governor Schwarzenegger vetoed it.
SB 900 (Corbett) from the 2007-08 session would have repealed
the existing special process from the Subdivision Map Act for
the conversion of mobilehome parks to resident ownership and,
thus, made the mitigation of impacts on non-purchasing
residents from these conversions subject to conditions for
approval imposed by local governments. That bill passed this
committee on a 6-3 vote on April 10, 2007 and later passed the
full Senate, but it was never voted upon in the Assembly
Housing and Community Development Committee.
POSITIONS: (Communicated to the committee before noon on
Wednesday, April 17,
2013.)
SUPPORT: California Rural Legal Assistance Foundation
(co-sponsor)
SB 510 (JACKSON) Page 9
Golden State Manufactured Home Owners League
(co-sponsor)
Western Center on Law and Poverty (co-sponsor)
California Alliance for Retired Americans
California State Association of Counties
Chateau Calistoga Homeowner's Organization
City of Capitola
Contempo Marin Homeowners Association
County of Santa Barbara
County of Santa Cruz
County of Sonoma
County of Ventura, Board of Supervisors
Desert Sands Mobile Home Community, 45
individuals
Fairness for Mobile Home Owners
Golden State Manufactured-Home-League, Inc.,
Super Chapter 256
Golden State Manufactured Homeowners League,
Calistoga
Golden State Manufactured Homeowners League, Los
Osos
Goleta Manufactured Home Owners Coalition
Honorable Fred Keely, Treasurer, County of Santa
Cruz
Lamplighter-Chino Mobile Home Park
Las Palmas de La Quinta, Homeowners Association
Board, 7 individuals
League of California Cities
Monarch Country Manufactured Home Owners
Association
Northern Santa Barbara County Manufactured
Homeowners Team
Rancho Buena Vista Homeowners Association
San Luis Obispo Mobilehome Residents Assistance
Panel
San Marcos Mobilehome Residents Association
Santa Cruz County Mobile and Manufactured Home
Commission
Santa Cruz County Manufactured/Mobile Homeowners
Association
Sierra Homeowners Association
Ventura Manufactured-home Residents Council
Vista Del Lago Homeowners Association
La Cumbre Mobile Home Park, 3 individuals
67 individuals
SB 510 (JACKSON) Page 10
OPPOSED: California Association of Realtors
California Mobilehome Parkowners Alliance
Hart, King & Coldren
J.L. Consultants, LLC
Monte Vista Mobil Estates
Sherman Grove Mobilhome Park
South Bay Estates
Sunland Trailer Park
The Fountains
Western Manufactured Housing Communities
Association