BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 510|
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THIRD READING
Bill No: SB 510
Author: Jackson (D), et al.
Amended: 4/30/13
Vote: 21
SENATE TRANSPORTATION & HOUSING COMMITTEE : 7-3, 4/23/13
AYES: DeSaulnier, Beall, Galgiani, Hueso, Liu, Pavley, Roth
NOES: Gaines, Cannella, Wyland
NO VOTE RECORDED: Lara
SUBJECT : Mobilehome park conversion to resident ownership
SOURCE : California Rural Legal Assistance Foundation
Golden State Manufactured Home Owners LeagueWestern
Center on Law and Poverty
DIGEST : 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 (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.
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The 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 (GOV) Section 66427.5), a subdivider of a
mobilehome park submits a tentative or parcel map to the local
agency for review and approval. GOV 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.
Offering each existing tenant an option to buy his/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.
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).
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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, by ordinance or
resolution, 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 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 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.
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
individual spaces within it. This is referred to as a
conversion to resident ownership.
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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 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 GOV Section
66427.5 to the 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.
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).
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.
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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 GOV Section 66427.5, the special process in the
Act enacted by SB 310. The court ruled that GOV 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 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
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.
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 of the
survey to the local agency as part of the subdivision map
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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.
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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
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SUPPORT : (Verified 4/30/13)
California Rural Legal Assistance Foundation (co-source)
Golden State Manufactured Home Owners League (co- source)
Western Center on Law and Poverty (co- source)
Besaro Mobilehome Park
California Alliance for Retired Americans
California State Association of Counties
Chateau Calistoga Homeowner's Organization
Cities of Carson and Ventura
Contempo Marin Homeowners Association
Counties of Santa Barbara and Ventura
Fairness for Mobile Home Owners
Golden State Manufactured-home Owners League, Inc., Chapter 1152
Golden State Manufactured-home Owners League, Inc., Chapter 1200
Golden State Manufactured-home Owners League, Inc., Chapter 841
Golden State Manufactured-Home-League, Inc., Super Chapter 256
Goleta Manufactured Home Owners Coalition
Lamplighter-Chino Mobile Home Park
Las Palmas de La Quinta, Homeowners Association Board
League of California Cities
Monarch Country Manufactured Home Owners Association
National Manufactured Home Owners Association, Inc.
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 Manufactured/Mobile Homeowners Association
Santa Cruz County Mobile and Manufactured Home Commission
Sierra Homeowners Association
Ventura Manufactured-Home Residents Council
Vista Del Lago Homeowners Association
OPPOSITION : (Verified 4/30/13)
California Association of Realtors
California Mobilehome Parkowners Alliance
Hart, King and Coldren
Western Manufactured Housing Communities Association
ARGUMENTS IN SUPPORT : The author's office notes that
mobilehomes have traditionally provided affordable housing to
people who would otherwise be priced out of any type of
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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.
Existing 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's office
notes that because of the lack of clarity in the provision of
the 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's
office 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.
ARGUMENTS IN OPPOSITION : The Western Manufactured Housing
Communities Association opposes this bill because it will
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 existing 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.
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JA:k 4/30/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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