BILL ANALYSIS �
AB 1797
Page 1
Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1797 (Torres) - As Amended: April 19, 2012
Policy Committee: Housing and
Community Development Vote: 5-1
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill amends provisions of loans made by the mobilehome park
resident occupancy program (MPROP). Specifically, this bill:
1)Authorizes the Department of Housing and Community Development
(HCD) to offer an interest rate below 3% for MPROP loans if
necessary, as long as it will not jeopardize the financial
stability of the Mobilehome Park Purchase Fund.
2)Authorizes HCD to provide technical assistance to applicants
under MPROP and include the reasonable costs of the assistance
as part of the loan principal.
FISCAL EFFECT
Reducing the interest rate on loans could cost the state
hundreds of thousands of dollars. The state has an existing
portfolio of loans, valued at approximately $50 million. The
actual cost to the state will vary by the demand for the loans
and the interest rate that HCD ends up offering on new loans.
COMMENTS
1)Purpose. According to the author, AB 1797 aims to increase
utilization of MPROP by making changes to the program. The
author argues the bill gives HCD the flexibility to offer a
lower interest rate on MPROP loans, provided that doing so
would not jeopardize the overall stability of the mobilehome
park purchase fund. HCD already has statutory authority to
offer flexible repayment terms, but is bound by the 3%
interest rate that is set in law. According to the author, HCD
AB 1797
Page 2
states they received applications that could have been
successful at a lower interest rate, particularly applications
for loans from individual residents who need assistance in
purchasing their space. The author also notes AB 1797 allows
HCD to provide technical assistance to loan applicants and
include the costs as part of the loan principal.
2)Background . MPROP was created in 1984 to provide low-interest
loans to finance the conversion of mobilehome parks to
resident ownership. The program is funded through a $5 fee
that certain mobilehome owners pay along with their annual
registration fee, as well as through loan repayment. There is
currently $14 million available under MPROP.
Between 1985 and 2001, MPROP provided loans to assist with
conversion in 66 mobilehome parks around the state. Since
2002, new loan activity under the program has slowed and
activity continues to decline. The program had no successful
applications in 2010 and only two in 2011. HCD indicates that
the increasing cost and complexity of park conversions are two
of the primary reasons for the reduction in the number of loan
applications.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081