BILL ANALYSIS �
SB 510
Page 1
Date of Hearing: June 26, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
SB 510 (Jackson) - As Amended: April 30, 2013
SENATE VOTE : 21-16
SUBJECT : Land use: subdivisions: rental mobilehome park
conversion.
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)Specifies, at the time of filing a tentative or parcel map for
a subdivision to be created from the conversion of a rental
mobilehome park to resident ownership, that the results of the
survey conducted by the subdivider as required to avoid the
economic displacement of all nonpurchasing residents, are
required to be considered in the agency's decision as to
whether to approve, conditionally approve, or disapprove the
map, and the agency may disapprove the map if it finds that
the results of the survey have not demonstrated the support of
at least a majority of the park's homeowners.
2)Allows local legislative bodies, by ordinance or resolution,
to implement the requirements of this section of law regarding
the conversion of a rental mobilehome park to resident
ownership.
3)Finds and declares that the provisions of the bill regarding
the survey do not constitute a change in, but rather are
declaratory of, existing law.
4)States the intent of the Legislature to clarify that the
legislative intent has been, and continues to be, to require a
local agency to consider, in making the decision to approve,
conditionally approve, or disapprove the tentative or parcel
map, the level of resident support for the proposed
conversion, and that those provisions authorize the agency, at
its discretion, to disapprove the map if it finds that the
results of the survey have not demonstrated the support of at
least a majority of a park's homeowners.
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EXISTING LAW :
1)Requires, at the time of filing a tentative or parcel map for
a subdivision to be created from the conversion of a rental
mobilehome park to resident ownership, the subdivider to avoid
the economic displacement of all nonpurchasing residents in
the following manner:
a) The subdivider shall offer each existing tenant an
option to either purchase his or her condominium or
subdivided unit, which is to be created by the conversion
of the park to resident ownership, or to continue residency
as a tenant;
b) The subdivider shall file a report on the impact of the
conversion upon residents of the mobilehome park to be
converted to resident owned subdivided interest;
c) The subdivider shall make a copy of the report available
to each resident of the mobilehome park at least 15 days
prior to the hearing on the map by the advisory agency or,
if there is no advisory agency, by the legislative body;
and,
d) The subdivider shall obtain a survey of support of
residents of the mobilehome park for the proposed
conversion.
2)Requires the following of the survey:
a) The survey shall be conducted in accordance with an
agreement between the subdivider and the resident
homeowners' association, if any, that is independent of the
subdivider or mobilehome park owner;
b) The survey shall be obtained pursuant to a written
ballot;
c) The survey shall be conducted so that each occupied
mobilehome space has one vote; and,
d) The results of the survey shall be submitted to the
local agency upon the filing of the tentative or parcel
map, to be considered as part of the subdivision map
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hearing.
3)Requires the subdivider to be subject to a hearing by a
legislative body or advisory agency, which is authorized by
local ordinance to approve, conditionally approve, or
disapprove the map. The scope of the hearing shall be limited
to the issue of compliance, as specified.
4)Requires the subdivider to be required to avoid the economic
displacement of all nonpurchasing residents in accordance with
the following:
a) As to nonpurchasing residents who are not lower income
households, as defined, the monthly rent, including any
applicable fees or charges for use of any preconversion
amenities, may increase from the preconversion rent to
market levels, as defined in an appraisal conducted in
accordance with nationally recognized professional
appraisal standards, in equal annual increase over a
four-year period; and,
b) As to nonpurchasing residents who are lower income
households, as defined, the monthly rent, including any
applicable fees or charges for use of any preconversion
amenities, may 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 shall the monthly rent be increased by an
amount greater than the average monthly percentage increase
in the Consumer Price Index (CPI) for the most recently
reported period.
5)Provides, for purposes of property tax assessment, that
mobilehomes be assessed in the same manner as real property.
FISCAL EFFECT : None
COMMENTS :
1)Current law requires, at the time of filing a tentative or
parcel map for a subdivision to be created from the conversion
of a rental mobilehome park to resident ownership, the
subdivider to avoid the economic displacement of all
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nonpurchasing residents in the following manner - first, the
subdivider must offer each existing tenant an option to either
purchase his or her condominium or subdivided unit, which is
to be created by the conversion of the park to resident
ownership, or to continue residency as a tenant; second, the
subdivider must file a report on the impact of the conversion
upon the residents of the mobilehome park to be converted to
resident owned subdivided interest; third, the subdivider is
required to make a copy of the report available to each
resident of the mobilehome park at least 15 days prior to the
hearing on the subdivision map; and lastly, that the
subdivider obtain a survey of support of residents of the
mobilehome park for the proposed conversion.
The provision in existing law requiring the survey of support
has been the subject of long-standing controversy including
multiple legislative efforts and a number of lawsuits.
2)This bill provides that a local agency is required to consider
the results of the survey in making its decision to approve,
conditionally approve, or disapprove the map, and that the
agency is authorized to disapprove the map if it finds that
the results of the survey have not demonstrated the support of
a least a majority of the park's homeowners. The bill allows
local legislative bodies to implement, by ordinance or
resolution, these survey requirements. Additionally the bill
sets forth findings and declarations of the Legislature that
the changes made by the bill do not constitute a change in,
and are declaratory of, existing law, and state the intent of
the Legislature to clarify the legislative intent of the
survey requirements in existing law.
This bill is co-sponsored by the California Rural Legal
Assistance Foundation, Western Center on Law & Poverty, and
the Golden State Manufactured Home Owners Association.
3)According to the author, "Mobile homes have traditionally
provided affordable housing to those who would otherwise be
priced out of home ownership. Local rent control ordinances
keep mobile homes at an affordable rate for seniors on fixed
incomes and working families who are struggling to get by.
"However, the affordability and stability that mobile homes
have provided for people seeking affordable housing is being
threatened by developers seeking financial gain, who have been
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using this provision of the Subdivision Map Act in a manner
that risks the economic displacement of mobile home owners.
"Existing law allows park owners to subdivide an existing
rental park and sell the individual lots on which the homes
are placed, commonly referred to as a 'condo conversion.' The
law requires that the park owner in seeking approval of a map,
conduct a survey of support from the residents. However,
because of the lack of clarity in mobile home conversion
statutes, park owners and their attorneys have been arguing
that local agencies cannot consider the survey as a factor in
the conversion process. 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.
"SB 510 provides the solution to concerns from local
governments, homeowners, cities, and courts by clarifying this
statute and making clear the role of the survey, so that local
governments have more statutory recourse and authority during
the conversion process."
4)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 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.
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
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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.
5)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 after 120 of its lots
had sold. At that point, the formula for mitigating economic
displacement under SB 310 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
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�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.
6)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 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
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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.
7)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 residents 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
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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."
8)The Western Manufactured Housing Communities Association (WMA)
and others oppose this bill because they believe that it would
severely limit park owners' 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.
9)The Legislature has seen this issue before and has heard a
number of related measures over the last six years, including
the following:
a) SB 900 (Corbett) of 2007: Would have added requirements
to the Subdivision Map Act for a conversion of a mobilehome
park by a subdivider to resident ownership to avoid the
economic displacement of non-purchasing residents;
b) AB 1542 (Evans) of 2007: Would have added requirements
to the Subdivision Map Act for a conversion of a mobilehome
park by a subdivider to resident ownership including
providing additional rent control protections to
non-purchasing mobilehome park residents;
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c) AB 566 (Nava) of 2010: Would have allowed a local
government to consider the level of support among current
residents when deciding whether to approve or disapprove
the conversion of a rental mobilehome park to resident
ownership; and,
d) SB 444 (Evans), of 2011: Would have clarified that a
local government, when considering an application to
convert a mobilehome park to resident ownership, is
required to consider the results of the survey to residents
about their support for the conversion in making its
decision to approve, conditionally approve, or disapprove
the map, and would have allowed the local government to
disapprove the map if it finds that the results of the
survey have not demonstrated adequate resident support.
1)Support arguments : Supports argue that the bill will give
local governments more statutory recourse and authority during
the conversion process, and permit local governments to adopt
their own local regulations, thereby giving more local
flexibility to determine how to assess a conversion
application and balance the interests of park owners and
homeowners.
Opposition arguments : Opponents argue that this bill,
"without showing there has been any harm under the current
law, gives the residents of a mobilehome park a very valuable
property right by allowing the outcome of their vote, and
specifically a lack of majority of support to be used in
determining if a park conversion can go forward."
2)This bill was heard by the Assembly Housing and Community
Development Committee on June 19, 2013 and passed on a 5-2
vote.
REGISTERED SUPPORT / OPPOSITION :
Support
California Rural Legal Assistance Foundation [CO-SPONSOR]
Golden State Manufactured Home Owners League (GSMOL)
[CO-SPONSOR]
Western Center on Law & Poverty [CO-SPONSOR]
California Alliance for Retired Americans
California State Association of Counties
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Chateau Calistoga Homeowner's Organization
Cities of Carson and San Marcos
City of Goleta (in concept)
Congress of California Seniors
Contempo Marin Homeowners Association
Counties of Lassen, Santa Cruz, Santa Barbara, Sonoma, and
Ventura
Fairness for Mobile Home Owners
GSMOL Chapters 841, 1200, 256 and 1152
Housing California
Las Palmas de la Quinta Homeowners Association Board
League of California Cities (in concept)
National Manufactured Home Owners Association, Inc.
San Marcos Mobilehomes Residents Association
Santa Cruz County Manufactured/Mobile Homeowners Association
Santa Cruz County Mobile and Manufactured Home Commission
Support (continued)
Sierra Homeowners Association
Ventura Manufactured-Home Resident's Council
Vista Del Lago Homeowner's Association
Individuals (203)
Opposition
California Association of Realtors
California Mobilehome Parkowners Alliance
Hart, King & Coldren
Western Manufactured Housing Communities Association
Law Offices of Gilchrist & Rutter
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958