BILL ANALYSIS Ó
SB 510
Page 1
Date of Hearing: June 19, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
SB 510 (Jackson) - As Amended: April 30, 2013
SENATE VOTE : 21-16
SUBJECT : Land use: subdivisions: rental mobilehome park
conversions.
SUMMARY : Allows local agencies to consider the level of
support among existing homeowners when deciding whether to
approve a subdivision map for the conversion of a rental
mobilehome park to resident ownership. Specifically, this bill :
1)Makes clear that a local agency may disapprove a subdivision
map for the conversion of a rental mobilehome park to resident
ownership if it finds that the results of the survey of
resident support for the conversion have not demonstrated the
support of at least a majority of the park's homeowners.
2)Makes clear that cities and counties may implement Subdivision
Map Act requirements for the conversion of rental mobilehome
parks to resident ownership by ordinance or resolution.
3)Includes Legislative findings specifying that the bill does
not constitute a change in, but rather is declaratory of,
existing law.
EXISTING LAW
1)Requires the subdivider of a mobilehome park to another use,
at the time of filing a tentative or parcel map for the
subdivision, to also file a report on the impact of the
conversion upon the displaced residents of the mobilehome park
to be converted. The report must address the availability of
adequate replacement space in other mobilehome parks
(Government Code §66427.4).
2)Allows the local legislative body authorized to approve or
disapprove a tentative or parcel map for the conversion of a
mobilehome park to another use to require the subdivider to
take steps to mitigate any adverse impact of the conversion on
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the ability of displaced residents to find adequate space in
another mobilehome park (Government Code §66427.4).
3)Authorizes local agencies to enact more stringent measures for
the regulation of conversions of mobilehome parks to other
uses (Government Code §66427.4).
4)Exempts the conversion of rental mobilehome parks to resident
ownership from the above provisions (Government Code
§66427.4).
5)With respect to the conversion of a rental mobilehome park to
resident ownership, requires the subdivider to offer existing
tenants the option to purchase their subdivided unit or to
continue residency as a tenant in the park if they decide not
to purchase their lot (Government Code §66427.5).
6)Requires the subdivider of a mobilehome park to resident
ownership to file a report on the impact of the conversion
upon residents and to make the report available to all
residents 15 days prior to the hearing on the tentative or
parcel map before the local legislative body (Government Code
§66427.5).
7)Requires the subdivider to conduct a survey of support of the
residents of the mobilehome park for a proposed conversion to
resident ownership that meets the following conditions:
a) Be conducted in accordance with an agreement between the
subdivider and a resident homeowners association if one
exists, that is independent of the subdivider;
b) Be obtained pursuant to a written ballot; and
c) Be conducted so that each occupied mobilehome space has
one vote.
(Government Code §66427.5)
8)Requires that the results of the survey of support be
submitted to the local legislative body upon the filing of the
tentative or parcel map to be considered as part of the
subdivision map hearing (Government Code §66427.5).
9)Limits the scope of the hearing of the legislative body on the
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tentative or parcel map to the subdivider's compliance with
the procedures to avoid the economic displacement of
non-purchasing residents (Government Code §66427.5).
10)Establishes the following method for avoiding the economic
displacement of non-purchasing residents:
a) Allows the monthly rent for non-purchasing residents who
are not low-income to increase from the preconversion rent
to market rents, as defined in an appraisal conducted in
accordance with nationally recognized professional
appraisal standards, in equal annual increases over four
years;
b) Allows the monthly rent for non-purchasing, low-income
residents to increase from the preconversion rent by an
amount equal to the average monthly increase in rent in the
four years immediately preceding the conversion, except
that in no event may the monthly rent be increased by an
amount greater than the average monthly percentage increase
in the Consumer Price Index for the most recently reported
period.
(Government Code §66427.5)
11)Waives the requirement for a parcel map or a tentative and
final map with limited exceptions in cases where at least
two-thirds of the owners of mobilehomes who are tenants in the
mobilehome park sign a petition, the language of which is
specified in statute, indicating their intent to purchase the
mobilehome park for purposes of converting it to resident
ownership (Government Code §66428.1).
FISCAL EFFECT : None
COMMENTS :
Background : In the vast majority of California's nearly 5,000
mobilehome parks, mobilehome residents own their homes but rent
the spaces on which their homes are installed. Contrary to their
name, mobilehomes generally are not mobile. Once installed in a
park, they generally cannot be moved. In the mid-1980s, as a
result of increasing park rents for low- and moderate-income
residents and the closure of some parks and displacement of
residents, the concept of resident-owned parks, where residents
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form a homeowners association to purchase a park and convert it
to a mobilehome subdivision, condominium, stock co-operative, or
non-profit ownership, gained popularity. Between 1984 and 1996,
the Legislature enacted a number of laws relative to conversions
to resident ownership.
Legislative History : The Subdivision Map Act vests in cities and
counties the power to regulate and control the design and
improvement of subdivisions within their boundaries. Conversions
of mobilehome parks to other uses are considered to be
subdivisions pursuant to the Subdivision Map Act. Prior to
1991, the Map Act required a subdivision map to be filed and
approved by the local jurisdiction before individual lots in a
park could be sold and converted to a resident-owned
subdivision or condominium, and allowed the local government to
impose its own conditions on the map. Subsequently, resident
groups and conversion consultants complained that by imposing
"unreasonable" conditions, some local governments were actually
hampering conversions to resident ownership.
In 1991, AB 1863 (Hauser), Chapter 745, exempted from
subdivision map requirements a conversion where two-thirds of
the residents were in support and intended to purchase their
lots. In 1995, the Legislature passed SB 310 (Craven), Chapter
256, which amended Government Code (GC) §66427.5 to establish
statewide standards for avoiding the economic displacement of
non-purchasing residents in the event of a conversion of a park
to resident ownership. Under the provisions of SB 310, rents
for lower-income non-purchasing households can only increase by
the average monthly increase in the four years preceding
conversion and shall not exceed the most recent increase in the
Consumer Price Index. For all other non-purchasing residents,
rents can increase to market levels in equal amounts over four
years. By establishing a state rent control formula for
low-income residents who do not purchase their lots, SB 310
preempted any local rent control ordinance from regulating rents
in a park converted to resident ownership.
SB 310 also specified that the scope of the local hearing on a
conversion to resident ownership shall be limited to the issue
of compliance with GC §66427.5.
El Dorado Palm Springs, LTD. v. City of Palm Springs et al. : 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
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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 after 120 of its
lots had sold. At that point, the formula for mitigating
economic displacement under SB 310 bill would be applicable.
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 argued that the effective date of the
conversion was when one lot sold, and that pursuant to GC
§66427.5, 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.
The appellate court ruled that the city was limited to the scope
of assuring that El Dorado's owner had complied with the
requirements of §66427.5. The court ruled that §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 Appellate Court opined that the
question of whether or not there should be more protections in
the statute to prevent "sham" conversions by a park owner was a
legislative one and not a legal one.
The proponents of SB 310 did not foresee instances in which
mobilehome park owners, rather than residents, would pursue
conversions using the provisions of §66427.5. Since the El
Dorado conversion, 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.
Survey Requirement: In an attempt to respond to the El Dorado
case, in 2002, the Legislature passed AB 930 (Keeley), Chapter
1143. AB 930 required a subdivider to obtain a survey of
support of existing residents in a mobilehome park for a
proposed conversion to resident ownership. The survey must be
conducted in accordance with an agreement between the subdivider
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and a homeowners' association and must be obtained as a written
ballot with each occupied mobilehome space having one vote.
Once completed, results of the survey must be submitted to the
local agency to be considered 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
resident conversions"
Since the survey requirement was added to the provision of the
Map Act governing conversions to resident ownership, some local
governments have enacted local ordinances to define "bona fide
resident conversion," 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.
Need for the Bill : 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. SB 510
addresses that hope by making clear that local governments have
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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. It does not prohibit local governments
from approving a conversion with less than majority support, but
rather gives cities and counties the ability to weigh the
results of the survey as part of their decision-making process.
The bill additionally specifies that local governments may
implement Subdivision Map Act requirements for conversions of
rental parks to resident ownership by ordinance or resolution.
Arguments in Suppor t: Writing in support of the bill, Fred
Keeley, who currently serves as the Santa Cruz County Treasurer
but who authored the bill that placed the survey requirement
into law, writes:
"In 2002, I was the author of AB 930, which enacted [the]
current resident support survey requirement. The purpose of
that resident support requirement, as expressed in my
letter to Governor Davis asking him to sign AB 930, was to
restore the Legislature's intent that such conversions
should proceed only 'if residents favored conversion and
acquisition of the park, if the conversion would provide
certainty and affordability to the residents' and 'where
the conversion provides benefit to the residents' (i.e.,
that they should be approved only if they were 'bona fide
resident conversions').
We never intended that a park owner would have to
demonstrate that all of a park's resdients would be happy
with their proposed conversion or that the results of a
resident survey would give the residents of a park absolute
'veto power' to bind a local jurisdiction to always have to
reject a conversion at any specific level of resident
support. However, our intent was clear that a local
jurisdiction, in making their decision on conversion
approval, was to consider whether or not the support survey
results demonstrated that the conversion was truly a 'bona
fide resident conversion' that was supported by and
benefitted the residents of the park rather than simply
being a scheme by their park owner to make a huge profit
that benefitted almost none of the park's residents."
Arguments in Opposition : The Western Manufactured Housing
Communities Association (WMA) and others oppose this bill
because they believes that it would severely limit park owners'
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ability to subdivide their land and sell it to the individuals
residing in the community. They assert 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. They further argue that giving park residents a say in
land use decisions involving the park infringes on the property
rights of the park owner.
Related legislation : AB 253 (Levine) extends to floating home
marinas the same subdivision requirements that apply to the
conversion of mobilehome parks. The language in AB 253 is
identical to the language proposed in this bill. AB 253 passed
this committee on May 1, 2013, by a vote of 7-0.
Last session, SB 444 (Evans) would have permitted a local
government to subject an application to convert a mobilehome
park to resident ownership to all relevant state laws, including
the Subdivision Map Act. That bill 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 4-2 vote on April 29, 2009, 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 5-2 vote on April 11,
2007, but Governor Schwarzenegger vetoed it.
SB 900 (Corbett) from the 2007-08 session would have repealed
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the existing special process from the Subdivision Map Act for
the conversion of mobilehome parks to resident ownership and
made the mitigation of impacts on non-purchasing residents from
these conversions subject to conditions for approval imposed by
local governments. That bill passed out of the Senate but was
never voted upon in this committee.
Double referred : If SB 510 passes this committee, it will be
referred to the Committee on Local Government.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation (co-sponsor)
Golden State Manufactured Home Owner's League (GSMOL)
(co-sponsor)
Western Center on Law and Poverty (co-sponsor)
Bay Federal Credit Union
California Alliance for Retired Americans
California State Association of Counties
Chateau Calistoga Homeowner's Organization
Cities of Carson, Goleta, and San Marcos
Contempo Marin Homeowners Association
Counties of Lassen, Santa Cruz, Santa Barbara, Sonoma, and
Ventura
Fairness for Mobile Home Owners
GSMOL Super Chapter 256
Fred Keeley, Santa Cruz County Treasurer
Housing California
Las Palmas de La Quinta Homeonwers Association
League of California Cities
National Manufactured Home Owners Association, Inc.
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
171 Individual letters
Opposition
California Assocation of Realtors
California Mobilehome Parkowners Alliance
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Gilchrist and Rutter
Western Manufactured Housing Communities Association
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085