BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: AB 1797
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: torres
VERSION: 4/19/12
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: June 19, 2012
SUBJECT:
Mobilehome Park Purchase Fund
DESCRIPTION:
This bill allows the Department of Housing and Community
Development (HCD) to lower the interest rate below 3% when it
makes loans from the Mobilehome Park Purchase Fund.
ANALYSIS:
The residents of California's nearly 5,000 mobilehome parks
typically own their mobilehomes and rent the spaces in the
mobilehome park in which the homes are placed. 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.
Historically, when mobilehome parks have converted to resident
ownership, the residents have 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. In 1984, the Legislature created the
Mobilehome Park Purchase Fund (fund) to encourage and facilitate
this process for converting mobilehome parks to resident
ownership through low-interest loans to resident organizations,
individual residents, qualified nonprofit housing sponsors, or
local governments. To qualify for a loan, at least 30 percent
of the converting park's spaces must be for homes owned by
low-income residents.
Existing law requires HCD to adopt regulations to administer the
fund and to make loans from the fund with a term of no longer
than three years and an interest rate of 3% per annum. Existing
AB 1797 (TORRES) Page 2
law also permits HCD to establish flexible repayment terms if
needed to achieve affordable housing costs for low-income
borrowers and if such terms do not risk the security of the
fund.
HCD administers the fund under its Mobilehome Park Resident
Ownership Program (MPROP).
This bill :
1.Permits HCD to lower the interest rate below 3% per annum on
loans made from the fund, provided HCD finds that a lower
interest rate is necessary and will not jeopardize the
financial stability of the fund.
2.Permits HCD to provide technical assistance to loan applicants
and include the cost of this assistance as part of the loan
principal.
COMMENTS:
1.Purpose . The author introduced this bill to increase the use
of MPROP and loans made through that program to support
mobilehome park conversions to resident ownership. 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 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 staff indicate
that an ability to lower interest rates on these loans would
allow for more affordable payments, particularly on loans made
to 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 in order to help homeowners and
resident organizations navigate the sometimes complex
financial aspects of a park conversion.
2.MPROP funding and history . The Mobilehome Park Purchase Fund
receives revenues from a $5 fee that mobilehome owners pay
with their annual registration fee. The fund also receives
repayments of loans HCD has made under MPROP. Currently $14
million is available under MPROP.
Between 1985 and 2001, MPROP provided loans to assist with
conversion in 66 mobilehome parks around the state. Since
AB 1797 (TORRES) Page 3
2002, new loan activity under the program has slowed and
activity continues to decline. The program had only two
successful applications in 2011. HCD staff reports that the
increasing cost and complexity of park conversions are two of
the primary reasons for the reduction in the number of loan
applications.
3.Author's amendment . The author will offer an amendment in
committee to permit HCD either to contract with a qualified
nonprofit or to use its own personnel to provide the technical
assistance allowed under this bill. This will ensure that HCD
has access to the necessary expertise and personnel needed to
assist with park conversion transactions.
Assembly Votes:
Floor: 51 - 26
Appr: 12 - 5
HCD: 5 - 1
POSITIONS: (Communicated to the Committee before noon on
Wednesday, June 13,
2012)
SUPPORT: Golden State Manufacture-Home Owners League
(sponsor)
Western Center on Law and Poverty
OPPOSED: None received.