BILL ANALYSIS �
AB 1797
Page 1
ASSEMBLY THIRD READING
AB 1797 (Torres)
As Amended April 19, 2012
Majority vote
HOUSING 5-1 APPROPRIATIONS 12-5
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|Ayes:|Torres, Atkins, Bradford, |Ayes:|Fuentes, Blumenfield, |
| |Fong, Hueso | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Gatto, Ammiano, Hill, |
| | | |Lara, Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Beth Gaines |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
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SUMMARY : Makes changes to 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 (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.
EXISTING LAW :
1)Establishes the fund in the State Treasury (Health and Safety
Code Section 50782).
2)Imposes an annual fee of $5 per transportable section of a
manufactured home or mobilehome that is subject to annual
registration, to be deposited in the fund (Health and Safety
Code Section 18114.1).
3)Authorizes HCD to make loans from the fund to resident
organizations for the purpose of financing mobilehome park
conversion costs for a term of no more than three years and at
AB 1797
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an interest rate of 3% (Health and Safety Code Section 50783).
4)Specifies that loans provided to resident organizations for
the purpose of financing conversion costs shall be for the
minimum amount necessary to enable a resident organization to
acquire and convert the mobilehome park (Health and Safety
Code Section 50783).
5)Authorizes HCD to make loans from the fund to: a) individual
low-income residents of mobilehome parks that have converted
to resident ownership; b) resident organizations that have
converted or plan to convert a mobilehome park to resident
ownership; or, c) qualified nonprofit housing sponsors or
local public entities that plan to acquire a mobilehome park,
provided that no less than 30% of the spaces in the park are
for occupancy by manufactured homes owned by low-income
residents (Health and Safety Code Section 50784).
6)Specifies that the purpose of providing loans pursuant to this
Health and Safety Code Section 50784 is to reduce the monthly
housing costs for low-income residents to an affordable level
(Health and Safety Code Section 50784).
7)Specifies that loans provided pursuant to Health and Safety
Code Section 50784 shall be for a term of no more than 30
years at an interest rate of 3% (Health and Safety Code
Section 50784).
8)Authorizes HCD to establish flexible repayment terms, such as
graduated payment schedules with negative amortization, for
loans provided pursuant to Health and Safety Code Section
50784 if the terms are necessary to reduce the monthly housing
costs for low-income residents to an affordable level and do
not represent an unacceptable risk to the security of the fund
(Health and Safety Code Section 50784).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, 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.
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COMMENTS : The Mobilehome Park Resident Occupancy Program 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.
This bill aims to increase utilization of MPROP by making
changes to the program. 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. HCD has indicated that they have had
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. In
addition, this bill allows HCD to provide technical assistance
to loan applicants and include the costs as part of the loan
principal.
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085
FN: 0003801