BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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          |SENATE RULES COMMITTEE            |                        SB 510|
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                                 UNFINISHED BUSINESS


          Bill No:  SB 510
          Author:   Jackson (D), et al.
          Amended:  8/19/13
          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

           SENATE FLOOR  :  21-16, 5/2/13
          AYES:  Beall, Corbett, De León, DeSaulnier, Evans, Galgiani,  
            Hancock, Hill, Hueso, Jackson, Lara, Leno, Lieu, Liu, Monning,  
            Padilla, Pavley, Price, Roth, Steinberg, Wolk
          NOES:  Anderson, Berryhill, Block, Calderon, Cannella, Emmerson,  
            Fuller, Gaines, Hernandez, Huff, Knight, Nielsen, Walters,  
            Wright, Wyland, Yee
          NO VOTE RECORDED:  Correa, Vacancy, Vacancy

           ASSEMBLY FLOOR  :  41-24, 9/3/13 - See last page for vote


           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  
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          of them support the conversion.

           Assembly Amendments  delete the language which found and declared  
          the changes in this bill are declaratory of existing law, and  
          delete additional intent language.

           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.

          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  

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             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).

          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.

           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,  

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          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 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  

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          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.

           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:  

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           No

           SUPPORT  :   (Verified  9/4/13) 

          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  9/4/13)

          California Mobilehome Parkowners Alliance
          Hart, King and Coldren
          Gilchrist & Rutter, Law Offices
          Western Manufactured Housing Communities Association

           ARGUMENTS IN SUPPORT  :    The author's office notes that  
          mobilehomes have traditionally provided affordable housing to  

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          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. 

          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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           ASSEMBLY FLOOR  : 41-24, 09/03/13
          AYES: Achadjian, Alejo, Ammiano, Atkins, Bloom, Bonilla, Bonta,  
            Bradford, Brown, Buchanan, Campos, Chau, Chesbro, Cooley,  
            Dickinson, Fong, Fox, Garcia, Gomez, Gonzalez, Gordon, Gorell,  
            Holden, Jones-Sawyer, Levine, Lowenthal, Medina, Mitchell,  
            Mullin, Nestande, V. Manuel Pérez, Quirk, Rendon, Skinner,  
            Stone, Ting, Weber, Wieckowski, Williams, Yamada, John A.  
            Pérez
          NOES: Allen, Bigelow, Chávez, Conway, Dahle, Donnelly, Beth  
            Gaines, Gatto, Hagman, Harkey, Jones, Linder, Logue,  
            Maienschein, Mansoor, Melendez, Morrell, Muratsuchi, Olsen,  
            Patterson, Perea, Wagner, Waldron, Wilk
          NO VOTE RECORDED: Bocanegra, Ian Calderon, Daly, Eggman,  
            Frazier, Gray, Grove, Hall, Roger Hernández, Nazarian, Pan,  
            Quirk-Silva, Salas, Vacancy, Vacancy


          JA:k  9/3/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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