BILL ANALYSIS Ó
SB 510
Page 1
SENATE THIRD READING
SB 510 (Jackson)
As Amended August 19, 2013
Majority vote
SENATE VOTE :21-16
HOUSING 5-2 LOCAL GOVERNMENT 7-0
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|Ayes:|Chau, Atkins, Brown, |Ayes:|Achadjian, Levine, Alejo, |
| |Quirk-Silva, Mullin | |Bradford, Gordon, Mullin, |
| | | |Rendon |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines, Maienschein | | |
| | | | |
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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)Clarifies 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)Clarifies that cities and counties may implement Subdivision
Map Act requirements for the conversion of rental mobilehome
parks to resident ownership by ordinance or resolution.
FISCAL EFFECT : None
COMMENTS : 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 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.
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 Subdivision 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) Section 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 Section 66427.5.
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
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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
Section 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 GC Section 66427.5. The court ruled that GC
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 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 GC Section 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.
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
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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
Subdivision 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.
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
last year when it urged the Legislature to instruct local
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agencies on how to consider the results of the resident survey.
This bill addresses that hope by making clear that local
governments have 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.
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085
FN: 0001841